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

Author

Listed:
  • Kin Chung Lo

    (York University, Canada)

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.

Suggested Citation

  • Kin Chung Lo, 1998. "Epistemic Conditions for Agreement and Stochastic Independence of epsilon-Contaminated Beliefs," Working Papers 1998_02, York University, Department of Economics.
    • Handle: RePEc:yca:wpaper:1998_02
    as

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    File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/contam4.pdf
    File Function: First version, 1998
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    References listed on IDEAS

    as
    1. Lo, Kin Chung, 1996. "Equilibrium in Beliefs under Uncertainty," Journal of Economic Theory, Elsevier, vol. 71(2), pages 443-484, November.
    2. Robert Aumann & Adam Brandenburger, 2014. "Epistemic Conditions for Nash Equilibrium," World Scientific Book Chapters, in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 5, pages 113-136, World Scientific Publishing Co. Pte. Ltd..
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    5. Lawrence Blume & Adam Brandenburger & Eddie Dekel, 2014. "Lexicographic Probabilities and Choice Under Uncertainty," World Scientific Book Chapters, in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 6, pages 137-160, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

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

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    More about this item

    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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