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Bayesian Games with Unawareness and Unawareness Perfection

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  • Martin Meier
  • Burkhard Schipper

    (Department of Economics, University of California Davis)

Abstract

Applying unawareness belief structures introduced in Heifetz, Meier, and Schipper (2013a), we develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are extended naturally from lower to higher awareness levels and restricted from higher to lower awareness levels. We apply Bayesian games with unawareness to investigate the robustness of equilibria to uncertainty about opponents' awareness of actions. We show that a Nash equilibrium of a strategic game is robust to unawareness of actions if and only if it is not weakly dominated. Finally, we discuss the relationship between standard Bayesian games and Bayesian games with unawareness.

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Bibliographic Info

Paper provided by University of California, Davis, Department of Economics in its series Working Papers with number 139.

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Length: 33
Date of creation: 13 Sep 2013
Date of revision:
Handle: RePEc:cda:wpaper:13-9

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Related research

Keywords: Unawareness; awareness; type-space; incomplete information; Bayesian games; equilibrium; perfection; undominated equilibrium; weak dominance; admissibility; inattention;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. A Search-Thoretic Model of the Term Premium
    by Christian Zimmermann in NEP-DGE blog on 2013-08-08 21:00:25
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Cited by:
  1. Bahel, Eric & Haller, Hans, 2013. "Cycles with undistinguished actions and extended Rock–Paper–Scissors games," Economics Letters, Elsevier, vol. 120(3), pages 588-591.
  2. Burkhard Schipper, 2010. "Revealed Unawareness," Working Papers 105, University of California, Davis, Department of Economics.
  3. Heinsalu, Sander, 2014. "Universal type structures with unawareness," Games and Economic Behavior, Elsevier, vol. 83(C), pages 255-266.
  4. Aviad Heifetz & Martin Meier & Burkhard Schipper, 2011. "Unawareness, Beliefs, and Speculative Trade," Working Papers 118, University of California, Davis, Department of Economics.

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