Correlated Equilibrium in Games with Incomplete Information

62 Pages Posted: 10 Oct 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

Date Written: October 10, 2011

Abstract

We define a notion of correlated equilibrium for games with incomplete information in a general setting with finite players, finite actions, and finite states, which we call Bayes correlated equilibrium. The set of Bayes correlated equilibria of a fixed incomplete information game equals the set of probability distributions over actions, states and types that might arise in any Bayes Nash equilibrium where players observed additional information. We show that more information always shrinks the set of Bayes correlated equilibria.

Keywords: Correlated equilibrium, Incomplete information, Robust predictions, Information structure

JEL Classification: C72, D82, D83

Suggested Citation

Bergemann, Dirk and Morris, Stephen Edward, Correlated Equilibrium in Games with Incomplete Information (October 10, 2011). Cowles Foundation Discussion Paper No. 1822; Economic Theory Center Working Paper No. 024-2011. Available at SSRN: https://ssrn.com/abstract=1941708 or http://dx.doi.org/10.2139/ssrn.1941708

Dirk Bergemann (Contact Author)

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

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
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

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