Interdependent Preferences and Strategic Distinguishability

43 Pages Posted: 28 Feb 2011

See all articles by Dirk Bergemann

Dirk Bergemann

Yale University - Cowles Foundation - Department of Economics; Yale University - Cowles Foundation

Stephen Morris

Princeton University - Department of Economics

Satoru Takahashi

National University of Singapore (NUS) - Department of Economics

Multiple version iconThere are 5 versions of this paper

Date Written: February 24, 2011

Abstract

A universal type space of interdependent expected utility preference types is constructed from higher-order preference hierarchies describing (i) an agent's (unconditional) preferences over a lottery space; (ii) the agent's preference over Anscombe-Aumann acts conditional on the unconditional preferences; and so on.

Two types are said to be strategically indistinguishable if they have an equilibrium action in common in any mechanism that they play. We show that two types are strategically indistinguishable if and only if they have the same preference hierarchy. We examine how this result extends to alternative solution concepts and strategic relations between types.

Keywords: Interdependent preferences, Higher-order preference hierarchy, Universal type space, Strategic distinguishability

JEL Classification: C79, D82, D83

Suggested Citation

Bergemann, Dirk and Morris, Stephen Edward and Takahashi, Satoru, Interdependent Preferences and Strategic Distinguishability (February 24, 2011). Cowles Foundation Discussion Paper No. 1772R. Available at SSRN: https://ssrn.com/abstract=1768879 or http://dx.doi.org/10.2139/ssrn.1768879

Dirk Bergemann (Contact Author)

Yale University - Cowles Foundation - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
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203-432-3592 (Phone)
203-432-2128 (Fax)

HOME PAGE: http://www.econ.yale.edu/~dirk/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Stephen Edward Morris

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Satoru Takahashi

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

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