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Signaling and mediation in games with common interests

  • Lehrer, Ehud
  • Rosenberg, Dinah
  • Shmaya, Eran
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    Players who have a common interest are engaged in a game with incomplete information. Before playing they get differential stochastic signals that depend on the actual state of nature. These signals provide the players with partial information about the state of nature and may also serve as a means of correlation. Different information structures induce different outcomes. An information structure is better than another, with respect to a certain solution concept, if the highest solution payoff it induces is at least that induced by the other structure. This paper characterizes the situation where one information structure is better than another with respect to various solution concepts: Nash equilibrium, strategic-normal-form correlated equilibrium, agent-normal-form correlated equilibrium and belief-invariant Bayesian solution. These solution concepts differ from one another in the scope of communication allowed between the players. The characterizations use maps that stochastically translate signals of one structure to signals of another.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0899-8256(09)00170-5
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    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 68 (2010)
    Issue (Month): 2 (March)
    Pages: 670-682

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    Handle: RePEc:eee:gamebe:v:68:y:2010:i:2:p:670-682
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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    1. R. Aumann, 2010. "Correlated Equilibrium as an expression of Bayesian Rationality," Levine's Bibliography 513, UCLA Department of Economics.
    2. Francoise Forges, 2006. "Correlated equilibrium in games with incomplete information revisited," Post-Print hal-00360743, HAL.
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    5. Ely, Jeffrey C. & Peski, Marcin, 2006. "Hierarchies of belief and interim rationalizability," Theoretical Economics, Econometric Society, vol. 1(1), pages 19-65, March.
    6. Neyman, Abraham, 1991. "The positive value of information," Games and Economic Behavior, Elsevier, vol. 3(3), pages 350-355, August.
    7. FORGES , Françoise, 1993. "Five Legitimate Definitions of Correlated Equilibrium in Games with Incomplete Information," CORE Discussion Papers 1993009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    9. Eddie Dekel & Drew Fudenberg & Stephen Morris, 2006. "Interim Correlated Rationalizability," Levine's Bibliography 122247000000001188, UCLA Department of Economics.
    10. GOSSNER, Olivier, 1997. "Comparison of information structures," CORE Discussion Papers 1997091, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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