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Endogenous private information structures

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  • Hurkens, Sjaak
  • Vulkan, Nir

Abstract

Many models in the economics literature deal with strategic situations with privately informed agents. In those models the information structure is assumed to be exogenous and common knowledge. In many applications information gathering is one of the strategic options available to agents. We formally incorporate this option into the game and the information structure will arise endogenously. We ask whether models with exogenous information structures, and the results they provide, are robust with respect to this endogenization. We show that any Nash equilibrium of the game with information acquisition induces a Nash equilibrium in the corresponding game with an exogenous structure. The same is not always true when `Nash equilibrium' is replaced by `sequential equilibrium' but we provide sufficient conditions on the structure of the game for which this is true. Moreover, we characterize the (sequential) Nash equilibria of games with an exogenous information structure that can arise as a (sequential) Nash equilibrium of a game with endogenous information acquisition,
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Suggested Citation

  • Hurkens, Sjaak & Vulkan, Nir, 2006. "Endogenous private information structures," European Economic Review, Elsevier, vol. 50(1), pages 35-54, January.
    • Handle: RePEc:eee:eecrev:v:50:y:2006:i:1:p:35-54
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    References listed on IDEAS

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    Cited by:

    1. Philipp C. Wichardt & Pavlo R. Blavatskyy, "undated". "Base-Rate Neglect and Imperfect Information Acquisition," IEW - Working Papers 233, Institute for Empirical Research in Economics - University of Zurich.
    2. Anders Poulsen & Michael Roos, 2010. "Do people make strategic commitments? Experimental evidence on strategic information avoidance," Experimental Economics, Springer;Economic Science Association, vol. 13(2), pages 206-225, June.
    3. Anders U. Poulsen & Michael V. M. Roos, 2009. "Do People Make Strategic Moves? Experimental Evidence on Strategic Information Avoidance," Discussion Papers 09-06, University of Copenhagen. Department of Economics.
    4. Poulsen, Anders, 2007. "Learning to Make Strategic Moves: Experimental Evidence," MPRA Paper 10927, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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