Signaling and Mediation in Games with Common Interests

26 Pages Posted: 2 Feb 2006

See all articles by Ehud Lehrer

Ehud Lehrer

Tel Aviv University - School of Mathematical Sciences

Dinah Rosenberg

Universite Paris 13

Eran Shmaya

Tel Aviv University - School of Mathematical Sciences

Date Written: January 31, 2006

Abstract

Players who have a common interest are engaged in a game with incomplete information. Before playing they get differential signals that stochastically depend on the actual state of nature. These signal not only provide the players with partial information about the state of nature but also serve as a correlation means.

Different information structures induce different outcomes. An information structure is better than another, with respect to a certain solution concept, if the highest solution payoff it induces is at least that induced by the latter structure. This paper fully characterizes when one information structure is better than another with respect to various solution concepts. The solution concepts we refer to differ from each other in the scope of communication allowed between the players. The characterizations are phrased in terms of maps that take signals of one structure and (stochastically) translate them to signals of another structure.

Keywords: Bayesian games, common interest, garbling, information structure, equilibrium

JEL Classification: C72

Suggested Citation

Lehrer, Ehud and Rosenberg, Dinah and Shmaya, Eran, Signaling and Mediation in Games with Common Interests (January 31, 2006). Available at SSRN: https://ssrn.com/abstract=880008 or http://dx.doi.org/10.2139/ssrn.880008

Ehud Lehrer (Contact Author)

Tel Aviv University - School of Mathematical Sciences ( email )

Tel Aviv 69978
Israel

Dinah Rosenberg

Universite Paris 13 ( email )

Avenue Jean Baptiste Clement
Villetaneuse, Seine Saint Denis 93430

Eran Shmaya

Tel Aviv University - School of Mathematical Sciences ( email )

Tel Aviv 69978
Israel

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