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Correlation and common priors in games with incomplete information

Listed author(s):
  • Liu, Qingmin
Registered author(s):

    This paper provides an explicit characterization of correlations that are implicitly captured by partition models for incomplete information games. The main result of this paper shows that every partition model for incomplete information can be decomposed into the conjunctions of a unique non-redundant model and a unique “individually uninformative” correlating device. The separation of the correlating device from the underlying non-redundant model allows us to separate their strategic implications. As an application, we use this correlation device to define correlated equilibria. Separating the common-prior property of the correlating devices from the underlying state space sheds light on the difference between interim independent and correlated rationalizability.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0022053114001318
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    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 157 (2015)
    Issue (Month): C ()
    Pages: 49-75

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    Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:49-75
    DOI: 10.1016/j.jet.2014.09.010
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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    1. Liu, Qingmin, 2009. "On redundant types and Bayesian formulation of incomplete information," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2115-2145, September.
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    4. Dirk Bergemann & Stephen Morris, 2013. "The Comparison of Information Structures in Games: Bayes Correlated Equilibrium and Individual Sufficiency," Levine's Working Paper Archive 786969000000000730, David K. Levine.
    5. Battigalli Pierpaolo & Siniscalchi Marciano, 2003. "Rationalization and Incomplete Information," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-46, June.
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    17. Dekel, Eddie & Fudenberg, Drew & Morris, Stephen, 2007. "Interim correlated rationalizability," Theoretical Economics, Econometric Society, vol. 2(1), pages 15-40, March.
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