Bayesian Equilibrium and Incentive-Compatibility: An Introduction
This paper is an introduction to the analysis of games with incomplete information, using a Bayesian model. the logical foundations of the Bayesian model are discussed. To describe rational behavior of players in a Bayesian game, two basic solution concerts are present: Bayesian equilibrium, for games in which the players cannot communicate; and Bayesian incentive-compatibility, for games in which the players can communicate. The concept of virtual utility is developed as a tool for characterizing efficient incentive-compatible coordination mechanisms.
|Date of creation:||Feb 1983|
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|Contact details of provider:|| Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014|
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- Harris, Milton & Raviv, Artur, 1981. "Allocation Mechanisms and the Design of Auctions," Econometrica, Econometric Society, vol. 49(6), pages 1477-99, November.
- Bengt Holmstrom & Roger B. Myerson, 1981.
"Efficient and Durable Decision Rules with Incomplete Information,"
495, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, vol. 51(6), pages 1799-819, November.
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