Interactive Epistemology and Solution Concepts for Games with Asymmetric Information

IGIER Working Paper No. 340

46 Pages Posted: 28 Oct 2009

See all articles by Pierpaolo Battigalli

Pierpaolo Battigalli

University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) - Department of Economics (DEP); Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS)

Alfredo Di Tillio

Bocconi University - Department of Economics

Edoardo Grillo

Princeton University

Antonio Penta

University of Wisconsin - Madison - Department of Economics

Date Written: July 31, 2008

Abstract

We use an interactive epistemology framework to provide a systematic analysis of some solution concepts for games with asymmetric information. We characterize solution concepts using expressible epistemic assumptions, represented as events in the universal type space generated by primitive uncertainty about the payoff relevant state, payoff irrelevant information, and actions. In most of the paper we adopt an interim perspective, which is appropriate to analyze genuine incomplete information. We relate Delta-rationalizability (Battigalli and Siniscalchi, Advances Theoretical Econ., 2003) to interim correlated rationalizability (Dekel et al., Theoretical Econ., 2007) and to rationalizability in the interim strategic form. We also consider the ex ante perspective, which is appropriate to analyze asymmetric information about an initial chance move. We prove the equivalence between interim correlated rationalizability and an ex ante notion of correlated rationalizability.

Suggested Citation

Battigalli, Pierpaolo and Di Tillio, Alfredo and Grillo, Edoardo and Penta, Antonio, Interactive Epistemology and Solution Concepts for Games with Asymmetric Information (July 31, 2008). IGIER Working Paper No. 340, Available at SSRN: https://ssrn.com/abstract=1494889 or http://dx.doi.org/10.2139/ssrn.1494889

Pierpaolo Battigalli

University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) - Department of Economics (DEP) ( email )

Via Gobbi 5
Milan, 20136
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Alfredo Di Tillio (Contact Author)

Bocconi University - Department of Economics ( email )

Milan
Italy

HOME PAGE: http://mypage.unibocconi.eu/alfredoditillio

Edoardo Grillo

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Antonio Penta

University of Wisconsin - Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States

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