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Feasibility and individual rationality in two-person Bayesian games

Author

Listed:
  • Françoise Forges

    (PSL, Université Paris-Dauphine)

  • Ulrich Horst

    (Humboldt University Berlin)

  • Antoine Salomon

    (PSL, Université Paris-Dauphine)

Abstract

We define feasible, posterior individually rational solutions for two-person Bayesian games with a single informed player. Such a solution can be achieved by direct signalling from the informed player and requires approval of both players after the signal has been sent. Without further assumptions on the Bayesian game, a solution does not necessarily exist. We show that, if the uninformed player has a “uniform punishment strategy” against the informed one, the existence of a solution follows from the existence of Nash equilibrium in infinitely repeated games with lack of information on one side. We also consider the extension of the result when both players have private information.

Suggested Citation

  • Françoise Forges & Ulrich Horst & Antoine Salomon, 2016. "Feasibility and individual rationality in two-person Bayesian games," International Journal of Game Theory, Springer;Game Theory Society, vol. 45(1), pages 11-36, March.
    • Handle: RePEc:spr:jogath:v:45:y:2016:i:1:d:10.1007_s00182-015-0520-8
    DOI: 10.1007/s00182-015-0520-8
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    1. Salomon, Antoine & Forges, Françoise, 2015. "Bayesian repeated games and reputation," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 70-104.
    2. Forges, Françoise & Horst, Ulrich, 2018. "Sender–receiver games with cooperation," Journal of Mathematical Economics, Elsevier, vol. 76(C), pages 52-61.
    3. Raghul S Venkatesh, 2018. "Communication and Commitment with Constraints," AMSE Working Papers 1856, Aix-Marseille School of Economics, France, revised Jul 2019.
    4. Lucas Pahl, 2021. "Information Spillover in Multiple Zero-sum Games," Papers 2111.01647, arXiv.org, revised Mar 2023.

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