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Games with Incomplete Information Played by `Bayesian' Players, Part III. The Basic Probability Distribution of the Game

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  • John C. Harsanyi

    (University of California, Berkeley)

Abstract

Parts I and II of this paper have described a new theory for the analysis of games with incomplete information. Two cases have been distinguished: consistent games in which there exists some basic probability distribution from which the players' subjective probability distributions can be derived as conditional probability distributions; and inconsistent games in which no such basic probability distribution exists. Part III will now show that in consistent games, where a basic probability distribution exists, it is essentially unique. It will also be argued that, in the absence of special reasons to the contrary, one should try to analyze any given game situation with incomplete information in terms of a consistent-game model. However, it will be shown that our theory can be extended also to inconsistent games, in case the situation does require the use of an inconsistent-game model.

Suggested Citation

  • John C. Harsanyi, 1968. "Games with Incomplete Information Played by `Bayesian' Players, Part III. The Basic Probability Distribution of the Game," Management Science, INFORMS, vol. 14(7), pages 486-502, March.
  • Handle: RePEc:inm:ormnsc:v:14:y:1968:i:7:p:486-502
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    File URL: http://dx.doi.org/10.1287/mnsc.14.7.486
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    Cited by:

    1. Di Maggio, Marco, 2009. "Sweet Talk: A Theory of Persuasion," MPRA Paper 18697, University Library of Munich, Germany.
    2. Halpern, Joseph Y. & Kets, Willemien, 2015. "Ambiguous language and common priors," Games and Economic Behavior, Elsevier, vol. 90(C), pages 171-180.
    3. Eric Van den Steen, 2004. "Rational Overoptimism (and Other Biases)," American Economic Review, American Economic Association, vol. 94(4), pages 1141-1151, September.
    4. Elselt, H. A., 1998. "Perception and information in a competitive location model," European Journal of Operational Research, Elsevier, vol. 108(1), pages 94-105, July.
    5. Figuieres, Charles & Tidball, Mabel & Jean-Marie, Alain, 2004. "On the effects of conjectures in a symmetric strategic setting," Research in Economics, Elsevier, vol. 58(1), pages 75-102, March.
    6. Chwe, Michael Suk-Young, 1999. "The Reeded Edge and the Phillips Curve: Money Neutrality, Common Knowledge, and Subjective Beliefs," Journal of Economic Theory, Elsevier, vol. 87(1), pages 49-71, July.
    7. Müller, Stephan & von Wangenheim, Georg, 2014. "Evolution of cooperation in social dilemmas: Signaling internalized norms," Center for European, Governance and Economic Development Research Discussion Papers 221, University of Goettingen, Department of Economics.
    8. Robert J. Aumann, 2005. "Musings on Information and Knowledge," Econ Journal Watch, Econ Journal Watch, vol. 2(1), pages 88-96, April.
    9. Patrick Hummel & John Morgan & Phillip C. Stocken, 2013. "A model of flops," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 585-609, December.
    10. repec:spr:decfin:v:40:y:2017:i:1:d:10.1007_s10203-017-0199-3 is not listed on IDEAS
    11. Zonderland, Maartje E. & Timmer, Judith, 2012. "Optimal allocation of MRI scan capacity among competing hospital departments," European Journal of Operational Research, Elsevier, vol. 219(3), pages 630-637.
    12. Roger B. Myerson, 2004. "Comments on "Games with Incomplete Information Played by 'Bayesian' Players, I--III Harsanyi's Games with Incoplete Information"," Management Science, INFORMS, vol. 50(12_supple), pages 1818-1824, December.
    13. Richard Makadok & Jay B. Barney, 2001. "Strategic Factor Market Intelligence: An Application of Information Economics to Strategy Formulation and Competitor Intelligence," Management Science, INFORMS, vol. 47(12), pages 1621-1638, December.
    14. Baykal-Gürsoy, Melike & Duan, Zhe & Poor, H. Vincent & Garnaev, Andrey, 2014. "Infrastructure security games," European Journal of Operational Research, Elsevier, vol. 239(2), pages 469-478.
    15. repec:eee:jcecon:v:45:y:2017:i:4:p:685-711 is not listed on IDEAS
    16. Güth, Werner & Pezanis-Christou, Paul, 2015. "Believing in correlated types in spite of independence: An indirect evolutionary analysis," Economics Letters, Elsevier, vol. 134(C), pages 1-3.
    17. Müller, Stephan & von Wangenheim, Georg, 2016. "Coevolution of Cooperation, Preferences and Cooperative Signals in Social Dilemmas," Annual Conference 2016 (Augsburg): Demographic Change 145713, Verein für Socialpolitik / German Economic Association.
    18. Laux, Volker & Stocken, Phillip C., 2012. "Managerial reporting, overoptimism, and litigation risk," Journal of Accounting and Economics, Elsevier, vol. 53(3), pages 577-591.
    19. Sonja Brangewitz & Claus-Jochen Haake, 2013. "Cooperative Transfer Price Negotiations under Incomplete Information," Working Papers CIE 64, Paderborn University, CIE Center for International Economics.
    20. Garrouste, Christelle & Loi, Massimo, 2009. "Applications De La Theorie Des Jeux A L'Education: Pour Quels Types Et Niveaux D'Education, Quels Modeles, Quels Resultats?
      [Applications of Game Theory in Education - What Types and At What Levels
      ," MPRA Paper 31825, University Library of Munich, Germany.
    21. Mark A. Satterthwaite, 1979. "On the Scope of Stockholder Unanimity Theorems," Discussion Papers 368, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    22. Van den Steen, Eric, 2005. "Too Motivated?," Working papers 18180, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    23. repec:eee:tefoso:v:125:y:2017:i:c:p:334-344 is not listed on IDEAS

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