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Robustness of equilibria in anonymous local games

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  • Kets, Willemien

Abstract

This paper studies the robustness of symmetric equilibria in anonymous local games to perturbations of prior beliefs. Two priors are strategically close on a class of games if players receive similar expected payoffs in equilibrium under the priors, for any game in that class. I show that if the structure of payoff interdependencies is sparse in a well-defined sense, the conditions for strategic proximity in anonymous local games are strictly weaker than the conditions for general Bayesian games of Kajii and Morris (1998) [11] when attention is restricted to symmetric equilibria. Hence, by exploiting the properties of anonymous local games, it is possible to obtain stronger robustness results for this class.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 146 (2011)
Issue (Month): 1 (January)
Pages: 300-325

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Handle: RePEc:eee:jetheo:v:146:y:2011:i:1:p:300-325

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Web page: http://www.elsevier.com/locate/inca/622869

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Keywords: Incomplete information Higher-order beliefs Robustness Strategic proximity Local interactions Anonymous games Heterogeneous externalities Network games;

References

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  1. Yi-Chun Chen & Alfredo Di Tillio & Eduardo Faingold & Siyang Xiong, 2009. "Uniform Topologies on Types," Cowles Foundation Discussion Papers 1734, Cowles Foundation for Research in Economics, Yale University.
  2. Eddie Dekel & Drew Fudenberg, 2006. "Topologies on Type," Discussion Papers 1417, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, vol. 1(2), pages 170-190, June.
  4. López-Pintado, Dunia, 2008. "Diffusion in complex social networks," Games and Economic Behavior, Elsevier, vol. 62(2), pages 573-590, March.
  5. Kajii, Atsushi & Morris, Stephen, 1998. "Payoff Continuity in Incomplete Information Games," Journal of Economic Theory, Elsevier, vol. 82(1), pages 267-276, September.
  6. Weinstein, Jonathan & Yildiz, Muhamet, 2007. "Impact of higher-order uncertainty," Games and Economic Behavior, Elsevier, vol. 60(1), pages 200-212, July.
  7. Carlsson, H. & Damme, E.E.C. van, 1993. "Global games and equilibrium selection," Open Access publications from Tilburg University urn:nbn:nl:ui:12-154416, Tilburg University.
  8. Jackson, Matthew O. & Yariv, Leeat, 2006. "Diffusion of Behavior and Equilibrium Properties in Network Games," Working Papers 1264, California Institute of Technology, Division of the Humanities and Social Sciences.
  9. Ehud Kalai, 2002. "Large Robust Games," Discussion Papers 1350, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Balder E. J. & Rustichini A., 1994. "An Equilibrium Result for Games with Private Information and Infinitely Many Players," Journal of Economic Theory, Elsevier, vol. 62(2), pages 385-393, April.
  11. Milchtaich, Igal, 2004. "Random-player games," Games and Economic Behavior, Elsevier, vol. 47(2), pages 353-388, May.
  12. Atsushi Kajii & Stephen Morris, . "The Robustness of Equilibria to Incomplete Information," Penn CARESS Working Papers ed504c985fc375cbe719b3f60, Penn Economics Department.
  13. Jonathan Weinstein & Muhamet Yildiz, 2007. "A Structure Theorem for Rationalizability with Application to Robust Predictions of Refinements," Econometrica, Econometric Society, vol. 75(2), pages 365-400, 03.
  14. Rothschild, Casey G., 2005. "Payoff continuity in incomplete information games: a comment," Journal of Economic Theory, Elsevier, vol. 120(2), pages 270-274, February.
  15. Roger B. Myerson, 1994. "Population Uncertainty and Poisson Games," Discussion Papers 1102R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by:
  1. Itay P. Fainmesser & David A. Goldberg, 2011. "Bilateral and Community Enforcement in a Networked Market with Simple Strategies," Working Papers 2011-2, Brown University, Department of Economics.

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