Informational Robustness and Solution Concepts

35 Pages Posted: 14 Jul 2015

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: July 2, 2015

Abstract

Consider the following "informational robustness" question: what can we say about the set of outcomes that may arise in equilibrium of a Bayesian game if players may observe some additional information? This set of outcomes will correspond to a solution concept that is weaker than equilibrium, with the solution concept depending on what restrictions are imposed on the additional information.

We describe a unified approach encompassing prior informational robustness results, as well as identifying the solution concept that corresponds to no restrictions on the additional information; this version of rationalizability depends only on the support of players’ beliefs and implies novel predictions in classic economic environments of coordination and trading games.

Our results generalize from complete to incomplete information the classical results in Aumann (1974, 1987) and Brandenburger and Dekel (1987) which can be (and were) given informational robustness interpretations. We discuss the relation between informational robustness and "epistemic" foundations of solution concepts.

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

JEL Classification: C72, C79, D82, D83

Suggested Citation

Bergemann, Dirk and Morris, Stephen Edward, Informational Robustness and Solution Concepts (July 2, 2015). Cowles Foundation Discussion Paper No. 1973R. Available at SSRN: https://ssrn.com/abstract=2630225 or http://dx.doi.org/10.2139/ssrn.2630225

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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