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Correlated Equilibrium as an Expression of Bayesian Rationality

In: SELECTED CONTRIBUTIONS TO GAME THEORY

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  • Robert J. Aumann

Abstract

Correlated equilibrium is formulated in a manner that does away with the dichotomy usually perceived between the “Bayesian” and the “game-theoretic” view of the world. From the Bayesian viewpoint, probabilities should be assignable to everything, including the prospect of a player choosing a certain strategy in a certain game. The so-called “game-theoretic” viewpoint holds that probabilities can only be assigned to events not governed by rational decision makers; for the latter, one must substitute an equilibrium (or other game-theoretic) notion. The current formulation synthesizes the two viewpoints: Correlated equilibrium is viewed as the result of Bayesian rationality; the equilibrium condition appears as a simple maximization of utility on the part of each player, given his information…

Suggested Citation

  • Robert J. Aumann, 2025. "Correlated Equilibrium as an Expression of Bayesian Rationality," World Scientific Book Chapters, in: SELECTED CONTRIBUTIONS TO GAME THEORY, chapter 7, pages 175-200, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811222610_0007
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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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