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Interim Partially Correlated Rationalizability

  • Tang, Qianfeng
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    In game theory, there is a basic methodological dichotomy between Harsanyi's "game-theoretic" view and Aumann's "Bayesian decision-theoretic" view of the world. We follow the game-theoretic view, propose and study interim partially correlated rationalizability for games with incomplete information. We argue that the distinction between this solution concept and the interim correlated rationalizability studied by Dekel, Fudenberg and Morris (2007) is fundamental, in that the latter implicitly follows Aumann's Bayesian view. Our main result shows that two types provide the same prediction in interim partially correlated rationalizability if and only if they have the same infinite hierarchy of beliefs over conditional beliefs. We also establish an equivalence result between this solution concept and the Bayesian solution--a notion of correlated equilibrium proposed by Forges (1993).

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    File URL: http://mpra.ub.uni-muenchen.de/26810/1/MPRA_paper_26810.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26810.

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    Date of creation: 11 Nov 2010
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    Handle: RePEc:pra:mprapa:26810
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    1. Liu, Qingmin, 2009. "On redundant types and Bayesian formulation of incomplete information," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2115-2145, September.
    2. Forges, Françoise, 2006. "Correlated equilibrium in games with incomplete information revisited," Economics Papers from University Paris Dauphine 123456789/157, Paris Dauphine University.
    3. Morris, Stephen & Dekel, Eddie & Fudenberg, Drew, 2007. "Interim Correlated Rationalizability," Scholarly Articles 3196333, Harvard University Department of Economics.
    4. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-50, July.
    5. Ely, Jeffrey C. & Peski, Marcin, 2006. "Hierarchies of belief and interim rationalizability," Theoretical Economics, Econometric Society, vol. 1(1), pages 19-65, March.
    6. Eddie Dekel & Drew Fudenberg & Stephen Morris, 2005. "Topologies on Types," Harvard Institute of Economic Research Working Papers 2093, Harvard - Institute of Economic Research.
    7. D. B. Bernheim, 2010. "Rationalizable Strategic Behavior," Levine's Working Paper Archive 514, David K. Levine.
    8. Brandenburger, Adam & Friedenberg, Amanda, 2008. "Intrinsic correlation in games," Journal of Economic Theory, Elsevier, vol. 141(1), pages 28-67, July.
    9. Brandenburger Adam & Dekel Eddie, 1993. "Hierarchies of Beliefs and Common Knowledge," Journal of Economic Theory, Elsevier, vol. 59(1), pages 189-198, February.
    10. Tang, Qianfeng, 2010. "The Bayesian Solution and Hierarchies of Beliefs," MPRA Paper 26811, University Library of Munich, Germany.
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