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Epistemic Conditions for Agreement and Stochastic Independence of epsilon-Contaminated Beliefs

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Author Info
Kin Chung Lo () (York University, Canada)

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Abstract

This paper studies strategic games in which the beliefs of each player are represented by a set of probability measures satisfying a parametric specialization that is called epsilon-contamination. That is, beliefs are represented by a set of probability measures, where every measure in the set has the form (1 - epsilon)P*+epsilon.p, p*being the benchmark probability measure, p being contamination,and epsilon reflecting the amount of error in p* that is deemed possible. Under a suitably modified common prior assumption, if beliefs about opponents' action choices are common knowlegdge, then beliefs satisfy some properties that can be interpreted as agreement and stochastic independence.

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File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/contam4.pdf
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File Function: First version, 1998
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Paper provided by York University, Department of Economics in its series Working Papers with number 1998_02.

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Length: 27 pages
Date of creation: Aug 1998
Date of revision:
Handle: RePEc:yca:wpaper:1998_02

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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  1. Gilboa Itzhak & Schmeidler David, 1993. "Updating Ambiguous Beliefs," Journal of Economic Theory, Elsevier, vol. 59(1), pages 33-49, February. [Downloadable!] (restricted)
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  2. Epstein, Larry G & Wang, Tan, 1994. "Intertemporal Asset Pricing Under Knightian Uncertainty," Econometrica, Econometric Society, vol. 62(2), pages 283-322, March. [Downloadable!] (restricted)
  3. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April. [Downloadable!] (restricted)
  4. Truman F. Bewley, 1988. "Knightian Decision Theory and Econometric Inference," Cowles Foundation Discussion Papers 868, Cowles Foundation, Yale University. [Downloadable!]
  5. Hendon, Ebbe & Jacobsen, Hans Jorgen & Sloth, Birgitte & Tranaes, Torben, 1996. "The product of capacities and belief functions," Mathematical Social Sciences, Elsevier, vol. 32(2), pages 95-108, October. [Downloadable!] (restricted)
    Other versions:
  6. Dow, James & Werlang, Sergio Ribeiro da Costa, 1992. "Uncertainty Aversion, Risk Aversion, and the Optimal Choice of Portfolio," Econometrica, Econometric Society, vol. 60(1), pages 197-204, January. [Downloadable!] (restricted)
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  10. Aumann, Robert & Brandenburger, Adam, 1995. "Epistemic Conditions for Nash Equilibrium," Econometrica, Econometric Society, vol. 63(5), pages 1161-80, September. [Downloadable!] (restricted)
  11. Lo, Kin Chung, 1996. "Equilibrium in Beliefs under Uncertainty," Journal of Economic Theory, Elsevier, vol. 71(2), pages 443-484, November. [Downloadable!] (restricted)
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  12. Bewley,Truman, 1989. "Market innovation and entrepreneurship: A Knightian view," Discussion Paper Serie A 233, University of Bonn, Germany.
  13. Truman F. Bewley, 1989. "Market Innovation and Entrepreneurship: A Knightian View," Cowles Foundation Discussion Papers 905, Cowles Foundation, Yale University. [Downloadable!]
  14. Blume, Lawrence & Brandenburger, Adam & Dekel, Eddie, 1991. "Lexicographic Probabilities and Choice under Uncertainty," Econometrica, Econometric Society, vol. 59(1), pages 61-79, January. [Downloadable!] (restricted)
  15. Epstein, Larry G., 1997. "Preference, Rationalizability and Equilibrium," Journal of Economic Theory, Elsevier, vol. 73(1), pages 1-29, March. [Downloadable!] (restricted)
  16. Kin Chung Lo, 1995. "Nash Equilibrium without Mutual Knowledge of Rationality," Working Papers ecpap-95-04, University of Toronto, Department of Economics. [Downloadable!]
  17. Brandenburger, Adam, 1992. "Knowledge and Equilibrium in Games," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 83-101, Fall. [Downloadable!] (restricted)
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  21. Dow James & Werlang Sergio Ribeiro Da Costa, 1994. "Nash Equilibrium under Knightian Uncertainty: Breaking Down Backward Induction," Journal of Economic Theory, Elsevier, vol. 64(2), pages 305-324, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Simon Grant & Atsushi Kajii, 2005. "Probabilistically Sophisticated Multiple Priors," KIER Working Papers 608, Kyoto University, Institute of Economic Research. [Downloadable!]
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