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A Note on Intrinsic Correlation

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  • Du, Songzi

Abstract

In this note we characterize the strategic implication of intrinsic correlation, introduced by Brandenburger and Friedenberg (2008), in the subjective correlated equilibrium setting of a complete information game. Intrinsic correlation restricts correlation devices to variables within the game, i.e. players's beliefs (and higher order beliefs) about each other's strategies, in contrast to signals or sunspots from the "outside." The characterization is a strengthening of best-response set with an injectivity condition for a certain subset identified by an iterative procedure. We also give an iterative procedure, analogous to the iterated removals of dominated strategies, that arrives at strategies consistent with our characterization, which always exist.

Suggested Citation

  • Du, Songzi, 2008. "A Note on Intrinsic Correlation," MPRA Paper 12698, University Library of Munich, Germany, revised 12 Jan 2009.
  • Handle: RePEc:pra:mprapa:12698
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    File URL: https://mpra.ub.uni-muenchen.de/12698/1/MPRA_paper_12698.pdf
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    References listed on IDEAS

    as
    1. Morris, Stephen & Ui, Takashi, 2005. "Generalized potentials and robust sets of equilibria," Journal of Economic Theory, Elsevier, vol. 124(1), pages 45-78, September.
    2. Aumann, Robert J., 1974. "Subjectivity and correlation in randomized strategies," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 67-96, March.
    3. Sergiu Hart & Andreu Mas-Colell, 2000. "A Simple Adaptive Procedure Leading to Correlated Equilibrium," Econometrica, Econometric Society, vol. 68(5), pages 1127-1150, September.
    4. Adam Brandenburger & Eddie Dekel, 2014. "Rationalizability and Correlated Equilibria," World Scientific Book Chapters,in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 3, pages 43-57 World Scientific Publishing Co. Pte. Ltd..
    5. Atsushi Kajii & Stephen Morris, 1997. "The Robustness of Equilibria to Incomplete Information," Econometrica, Econometric Society, vol. 65(6), pages 1283-1310, November.
    6. Adam Brandenburger & Amanda Friedenberg, 2014. "Intrinsic Correlation in Games," World Scientific Book Chapters,in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 4, pages 59-111 World Scientific Publishing Co. Pte. Ltd..
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    More about this item

    Keywords

    game theory; correlated equilibrium; rationalizability; intrinsic correlation; higher order beliefs; redundant types; epistemics;

    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

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