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Bayesian Equilibrium and Incentive-Compatibility: An Introduction

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  • Roger B. Myerson

Abstract

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.

Suggested Citation

  • Roger B. Myerson, 1983. "Bayesian Equilibrium and Incentive-Compatibility: An Introduction," Discussion Papers 548, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    • Handle: RePEc:nwu:cmsems:548
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    File URL: http://www.kellogg.northwestern.edu/research/math/papers/548.pdf
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    References listed on IDEAS

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    1. Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, vol. 51(6), pages 1799-1819, November.
    2. Harris, Milton & Raviv, Artur, 1981. "Allocation Mechanisms and the Design of Auctions," Econometrica, Econometric Society, vol. 49(6), pages 1477-1499, November.
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    Cited by:

    1. Kay Mitusch & Roland Strausz, 2005. "Mediation in Situations of Conflict and Limited Commitment," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 21(2), pages 467-500, October.
    2. Winand Emons, 2005. "Perjury versus Truth Revelation: Quantity or Quality of Testimony," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(3), pages 392-410, September.
    3. Kevin Cotter, 1988. "Similarity of Correlated Equilibria," Discussion Papers 781, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Robert Cooter & Winand Emons, 2003. "Truth-Revealing Mechanisms for Courts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(2), pages 259-279, June.
    5. Myerson, R B, 1986. "Acceptable and Predominant Correlated Equilibria," International Journal of Game Theory, Springer;Game Theory Society, vol. 15(3), pages 133-154.
    6. Kevin D. Cotter, 1989. "Communication Equilibria with Large State Spaces," Discussion Papers 862, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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