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Bayesian Games with Unawareness and Unawareness Perfection

Author

Listed:
  • Martin Meier
  • Burkhard Schipper

    (Department of Economics, University of California Davis)

Abstract

Applying unawareness belief structures introduced in Heifetz, Meier, and Schipper (2013a), we develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are extended naturally from lower to higher awareness levels and restricted from higher to lower awareness levels. We apply Bayesian games with unawareness to investigate the robustness of equilibria to uncertainty about opponents' awareness of actions. We show that a Nash equilibrium of a strategic game is robust to unawareness of actions if and only if it is not weakly dominated. Finally, we discuss the relationship between standard Bayesian games and Bayesian games with unawareness.

Suggested Citation

  • Martin Meier & Burkhard Schipper, 2013. "Bayesian Games with Unawareness and Unawareness Perfection," Working Papers 139, University of California, Davis, Department of Economics.
  • Handle: RePEc:cda:wpaper:13-9
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    File URL: http://wp.econ.ucdavis.edu/13-9.pdf
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. A Search-Thoretic Model of the Term Premium
      by Christian Zimmermann in NEP-DGE blog on 2013-08-09 02:00:25

    Citations

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    Cited by:

    1. Liu, Zhen, 2016. "Games with incomplete information when players are partially aware of others’ signals," Journal of Mathematical Economics, Elsevier, vol. 65(C), pages 58-70.
    2. Burkhard Schipper, 2010. "Revealed Unawareness," Working Papers 105, University of California, Davis, Department of Economics.
    3. Schipper, Burkhard C, 2018. "Discovery and Equilibrium in Games with Unawareness," MPRA Paper 86300, University Library of Munich, Germany.
    4. Heinsalu, Sander, 2014. "Universal type structures with unawareness," Games and Economic Behavior, Elsevier, vol. 83(C), pages 255-266.
    5. repec:eee:gamebe:v:109:y:2018:i:c:p:598-615 is not listed on IDEAS
    6. Heifetz, Aviad & Meier, Martin & Schipper, Burkhard C., 2013. "Unawareness, beliefs, and speculative trade," Games and Economic Behavior, Elsevier, vol. 77(1), pages 100-121.
    7. Li, Sanxi & Peitz, Martin & Zhao, Xiaojian, 2016. "Information disclosure and consumer awareness," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 209-230.
    8. Yasuo Sasaki, 2016. "An Equivalence Result on the Reduction of Games with Unawareness," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(03), pages 1-27, September.
    9. Bahel, Eric & Haller, Hans, 2013. "Cycles with undistinguished actions and extended Rock–Paper–Scissors games," Economics Letters, Elsevier, vol. 120(3), pages 588-591.
    10. repec:spr:annopr:v:256:y:2017:i:2:d:10.1007_s10479-016-2266-5 is not listed on IDEAS
    11. repec:kap:theord:v:83:y:2017:i:3:d:10.1007_s11238-016-9580-x is not listed on IDEAS

    More about this item

    Keywords

    Unawareness; awareness; type-space; incomplete information; Bayesian games; equilibrium; perfection; undominated equilibrium; weak dominance; admissibility; inattention;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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