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On redundant types and Bayesian formulation of incomplete information

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  • Liu, Qingmin

Abstract

A type structure is non-redundant if no two types of a player represent the same hierarchy of beliefs over the given set of basic uncertainties, and it is redundant otherwise. Under a mild necessary and sufficient condition termed separativity, we show that any redundant structure can be identified with a non-redundant structure with an extended space of basic uncertainties. The belief hierarchies induced by the latter structure, when "marginalized," coincide with those induced by the former. We argue that redundant structures can provide different Bayesian equilibrium predictions only because they reflect a richer set of uncertainties entertained by players but unspecified by the analyst. The analyst shall make use of a non-redundant structure, unless he believes that he misspecified the players' space of basic uncertainties. We also consider bounding the extra uncertainties by the action space for Bayesian equilibrium predictions.

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  • Liu, Qingmin, 2009. "On redundant types and Bayesian formulation of incomplete information," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2115-2145, September.
    • Handle: RePEc:eee:jetheo:v:144:y:2009:i:5:p:2115-2145
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    Cited by:

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    3. Tang, Qianfeng, 2015. "Hierarchies of beliefs and the belief-invariant Bayesian solution," Journal of Mathematical Economics, Elsevier, vol. 59(C), pages 111-116.
    4. Battigalli Pierpaolo & Di Tillio Alfredo & Grillo Edoardo & Penta Antonio, 2011. "Interactive Epistemology and Solution Concepts for Games with Asymmetric Information," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-40, March.
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    6. Amanda Friedenberg & Martin Meier, 2011. "On the relationship between hierarchy and type morphisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(3), pages 377-399, April.
    7. Andrés Perea & Willemien Kets, 2016. "When Do Types Induce the Same Belief Hierarchy?," Games, MDPI, vol. 7(4), pages 1-17, October.
    8. Willemien Kets, 2012. "Bounded Reasoning and Higher-Order Uncertainty," Discussion Papers 1547, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Qin, Cheng-Zhong & Yang, Chun-Lei, 2009. "An Explicit Approach to Modeling Finite-Order Type Spaces and Applications," University of California at Santa Barbara, Economics Working Paper Series qt8hq7j89k, Department of Economics, UC Santa Barbara.
    10. Ronald Stauber, 2013. "A Framework for Robustness to Ambiguity of Higher-Order Beliefs," ANU Working Papers in Economics and Econometrics 2013-602, Australian National University, College of Business and Economics, School of Economics.
    11. ,, 2013. "Rationalizable conjectural equilibrium: A framework for robust predictions," Theoretical Economics, Econometric Society, vol. 8(2), May.
    12. Amanda Friedenberg & Martin Meier, 2011. "On the relationship between hierarchy and type morphisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(3), pages 377-399, April.
    13. Tang, Qianfeng, 2010. "The Bayesian Solution and Hierarchies of Beliefs," MPRA Paper 26811, University Library of Munich, Germany.
    14. Yildiz, Muhamet, 2015. "Invariance to representation of information," Games and Economic Behavior, Elsevier, vol. 94(C), pages 142-156.
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    19. Tang, Qianfeng, 2015. "Interim partially correlated rationalizability," Games and Economic Behavior, Elsevier, vol. 91(C), pages 36-44.
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