Extremal Choice Equilibrium: Existence and Purification with Infinite-Dimensional Externalities
AbstractWe prove existence and purification results for equilibria in which players choose extreme points of their feasible actions in a class of strategic environments exhibiting a product structure. We assume finite-dimensional action sets and allow for infinite-dimensional externalities. Applied to large games, we obtain existence of Nash equilibrium in pure strategies while allowing a continuum of groups and general dependence of payoffs on average actions across groups, without resorting to saturated measure spaces. Applied to games of incomplete information, we obtain a new purification result for Bayes-Nash equilibria that permits substantial correlation across types, without assuming conditional independence given the realization of a finite environmental state. We highlight our results in examples of industrial organization, auctions, and voting.
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Bibliographic InfoPaper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 567.
Length: 29 pages
Date of creation: Oct 2011
Date of revision:
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Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-07 (All new papers)
- NEP-GTH-2011-11-07 (Game Theory)
- NEP-MIC-2011-11-07 (Microeconomics)
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