Beliefs in Network Games

CentER Discussion Paper No. 2008-05

48 Pages Posted: 1 Aug 2007

See all articles by Willemien Kets

Willemien Kets

University of Oxford - Department of Economics

Date Written: January 2008

Abstract

Networks can have an important effect on economic outcomes. Given the complexity of many of these networks, agents will generally not know their structure. We study the sensitivity of game-theoretic predictions to the specification of players' (common) prior on the network in a setting where players play a fixed game with their neighbors and only have local information on the network structure. We show that two priors are close in a strategic sense if and only if (i) the priors assign similar probabilities to all events that involve a player and his neighbors, and (ii) with high probability, a player believes, given his type, that his neighbors' conditional beliefs are close under the two priors, and that his neighbors believe, given their type, that...the conditional beliefs of their neighbors are close, for any number of iterations.

Keywords: network games, incomplete information, higher order beliefs, continuity, random networks, population uncertainty

JEL Classification: C72, D82, L14, Z13

Suggested Citation

Kets, Willemien, Beliefs in Network Games (January 2008). CentER Discussion Paper No. 2008-05, Available at SSRN: https://ssrn.com/abstract=1004279 or http://dx.doi.org/10.2139/ssrn.1004279

Willemien Kets (Contact Author)

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

HOME PAGE: http://wkets.org

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