Informational Robustness and Solution Concepts

30 Pages Posted: 17 Dec 2014

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

Multiple version iconThere are 3 versions of this paper

Date Written: December 15, 2014

Abstract

We discuss four solution concepts for games with incomplete information. We show how each solution concept can be viewed as encoding informational robustness. For a given type space, we consider expansions of the type space that provide players with additional signals. We distinguish between expansions along two dimensions. First, the signals can either convey payoff relevant information or only payoff irrelevant information. Second, the signals can be generated from a common (prior) distribution or not. We establish the equivalence between Bayes Nash equilibrium behavior under the resulting expansion of the type space and a corresponding more permissive solution concept under the original type space. This approach unifies some existing literature and, in the case of an expansion without a common prior and allowing for payoff relevant signals, leads us to a new solution concept that we dub belief-free rationalizability.

Keywords: Incomplete information, Informational robustness, Bayes correlated equilibrium, Interim corrrelated rationalizability, Belief free rationalizability

JEL Classification: C79, D82

Suggested Citation

Bergemann, Dirk and Morris, Stephen Edward, Informational Robustness and Solution Concepts (December 15, 2014). Cowles Foundation Discussion Paper No. 1973. Available at SSRN: https://ssrn.com/abstract=2538638 or http://dx.doi.org/10.2139/ssrn.2538638

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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