Rationalization and Incomplete Information
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Pierpaolo Battigalli
We analyze a family of extensive-form solution procedures for games with incomplete information that do not require the specification of an epistemic type space a la Harsanyi, but can accommodate a (commonly known) collection of explicit restrictions D on first-order beliefs. For any fixed D we obtain a solution called D-rationalizability.In static games, D-rationalizability characterizes the set of outcomes (combinations of payoff types and strategies) that may occur in any Bayesian equilibrium model consistent with D; these are precisely the outcomes consistent with common certainty of rationality and of the restrictions D. Hence, our approach to the analysis of incomplete-information games is consistent with Harsanyi's, and it may be viewed as capturing the robust implications of Bayesian equilibrium analysis.In dynamic games, D-rationalizability yields a forward-induction refinement of this set of Bayesian equilibrium outcomes. Focusing on the restriction that first-order beliefs be consistent with a given distribution on terminal nodes, we obtain a refinement of self-confirming equilibrium. In signalling games, this refinement coincides with the Iterated Intuitive Criterion.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Topics Article
- Non-robustness of some economic models
- Incentives for Boundedly Rational Agents
- On Non-responsiveness in Adverse Selection Models with Common Value
- Contributions Article
- Competitive Equilibria With Incomplete Markets and Endogenous Bankruptcy
- A One-Period Version of Rubinstein's Bargaining Game
- Upgrading, Degrading, and Intertemporal Price Discrimination
- Adverse Selection and Insurance Contracting: A Rank-Dependent Utility Analysis
- Incomplete Contracts with Cross-Investments
- Communication and Voting with Double-Sided Information
- Signal Jamming in Games with Multiple Senders
- Homothetic or Cobb-Douglas Behavior Through Aggregation
- Advances Article
- The Generalized Linear Production Model: Solvability, Nonsubstitution and Productivity Measurement
- Contagion and State Dependent Mutations
- Rationalization and Incomplete Information
- Contractual Externalities and Common Agency Equilibria
- Market Research and Market Design
