Belief-Free Rationalizability and Informational Robustness

32 Pages Posted: 19 Dec 2016

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: December 19, 2016

Abstract

We propose an incomplete information analogue of rationalizability. An action is said to be belief-free rationalizable if it survives the following iterated deletion process. At each stage, we delete actions for a type of a player that are not a best response to some conjecture that puts weight only on profiles of types of other players and states that that type thinks possible, combined with actions of those types that have survived so far. We describe a number of applications.

This solution concept characterizes the implications of equilibrium when a player is known to have some private information but may have additional information. It thus answers the "informational robustness" question of 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.

Keywords: Incomplete Information, Informational Robustness, Bayes Correlated Equilibrium, Interim Correlated Rationalizability, Belief-Free Rationalizability

JEL Classification: C72, C79, D82, D83

Suggested Citation

Bergemann, Dirk and Morris, Stephen Edward, Belief-Free Rationalizability and Informational Robustness (December 19, 2016). Cowles Foundation Discussion Paper No. 2066. Available at SSRN: https://ssrn.com/abstract=2887380 or http://dx.doi.org/10.2139/ssrn.2887380

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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