Ex-Post Regret Learning in Games with Fixed and Random Matching: The Case of Private Values

Brown University Economic Working Paper

40 Pages Posted: 8 Jun 2010

See all articles by Rene Saran

Rene Saran

University of Cincinnati - Department of Economics

Roberto Serrano

Brown University

Date Written: June 8, 2010

Abstract

In contexts in which players have no priors, we analyze a learning process based on ex-post regret as a guide to understand how to play games of incomplete information under private values. The conclusions depend on whether players interact within a fixed set (fixed matching) or they are randomly matched to play the game (random matching). The relevant long run predictions are minimal sets that are closed under “the same or better reply” operations. Under additional assumptions in each case, the prediction boils down to pure Nash equilibria, pure ex-post equilibria or pure minimax regret equilibria. These three paradigms exhibit nice robustness properties in the sense that they are independent of beliefs about the exogenous uncertainty of type spaces. The results are illustrated in second-price auctions, first-price auctions and Bertrand duopolies.

Keywords: Fixed and Random Matching, Incomplete Information, Ex-Post

JEL Classification: C72, C73, D43, D44, D82, D83

Suggested Citation

Saran, Rene and Serrano, Roberto, Ex-Post Regret Learning in Games with Fixed and Random Matching: The Case of Private Values (June 8, 2010). Brown University Economic Working Paper, Available at SSRN: https://ssrn.com/abstract=1622242 or http://dx.doi.org/10.2139/ssrn.1622242

Rene Saran (Contact Author)

University of Cincinnati - Department of Economics ( email )

Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 0371
Cincinnati, OH 45221-0211
United States

Roberto Serrano

Brown University ( email )

64 Waterman Street
Providence, RI 02912
United States
401-863-1036 (Phone)
401-863-1970 (Fax)

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