The Strategic Impact of Higher-Order Beliefs
Previous research has established that the predictions made by game theory about strategic behavior in incomplete information games are quite sensitive to the assumptions made about the players' infinite hierarchies of beliefs. We evaluate the severity of this robustness problem by characterizing conditions on the primitives of the model -- the players’ hierarchies of beliefs -- for the strategic behavior of a given Harsanyi type to be approximated by the strategic behavior of (a sequence of) perturbed types. This amounts to providing characterizations of the strategic topologies of Dekel, Fudenberg, and Morris (2006) in terms of beliefs. We apply our characterizations to a variety of questions concerning robustness to perturbations of higher-order beliefs, including genericity of common priors, and the connections between robustness of strategic behavior and the notion of common p-belief of Monderer and Samet (1989).
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- Dekel, Eddie & Fudenberg, Drew & Morris, Stephen, 2007.
"Interim correlated rationalizability,"
Econometric Society, vol. 2(1), pages 15-40, March.
- Eddie Dekel & Drew Fudenberg & Stephen Morris, 2006. "Interim Correlated Rationalizability," Levine's Bibliography 122247000000001188, UCLA Department of Economics.
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Discussion Paper Series
dp350, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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- Xiong, Siyang & Chen, Yi-Chun & di Tillio, Alfredo & Faingold, Eduardo, 2010.
"Uniform topologies on types,"
Econometric Society, vol. 5(3), September.
- Dirk Bergemann & Stephen Morris, 2009.
"Robust Implementation in Direct Mechanisms,"
Review of Economic Studies,
Oxford University Press, vol. 76(4), pages 1175-1204.
- Bergemann, Dirk & Stephen Morris, 2006. "Robust Implementation in Direct Mechanisms," Cowles Foundation Discussion Papers 1561RR, Cowles Foundation for Research in Economics, Yale University, revised Jan 2009.
- Dirk Bergemann & Stephen Morris, 2009. "Robust Implementation in Direct Mechanisms," Levine's Working Paper Archive 814577000000000109, David K. Levine.
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- Jonathan Weinstein & Muhamet Yildiz, 2007. "A Structure Theorem for Rationalizability with Application to Robust Predictions of Refinements," Econometrica, Econometric Society, vol. 75(2), pages 365-400, 03.
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