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The Bayesian Solution and Hierarchies of Beliefs

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  • Tang, Qianfeng

Abstract

The Bayesian solution is a notion of correlated equilibrium proposed by Forges (1993), and hierarchies of beliefs over conditional beliefs are introduced by Ely and Pęski (2006) in their study of interim rationalizability. We study the connection between the two concepts. We say that two type spaces are equivalent if they represent the same set of hierarchies of beliefs over conditional beliefs. We show that the correlation embedded in equivalent type spaces can be characterized by partially correlating devices, which send correlated signals to players in a belief invariant way. Since such correlating devices also implement the Bayesian solution, we establish that the Bayesian solution is invariant across equivalent type spaces.

Suggested Citation

  • Tang, Qianfeng, 2010. "The Bayesian Solution and Hierarchies of Beliefs," MPRA Paper 26811, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:26811
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    File URL: https://mpra.ub.uni-muenchen.de/26902/2/MPRA_paper_26902.pdf
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    References listed on IDEAS

    as
    1. Françoise Forges, 2006. "Correlated Equilibrium in Games with Incomplete Information Revisited," Theory and Decision, Springer, vol. 61(4), pages 329-344, December.
    2. Liu, Qingmin, 2009. "On redundant types and Bayesian formulation of incomplete information," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2115-2145, September.
    3. Ely, Jeffrey C. & Peski, Marcin, 2006. "Hierarchies of belief and interim rationalizability," Theoretical Economics, Econometric Society, vol. 1(1), pages 19-65, March.
    4. Adam Brandenburger & Eddie Dekel, 2014. "Hierarchies of Beliefs and Common Knowledge," World Scientific Book Chapters,in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 2, pages 31-41 World Scientific Publishing Co. Pte. Ltd..
    5. Robert J. Aumann, 1998. "Common Priors: A Reply to Gul," Econometrica, Econometric Society, vol. 66(4), pages 929-938, July.
    6. repec:dau:papers:123456789/157 is not listed on IDEAS
    7. Dekel, Eddie & Fudenberg, Drew & Morris, Stephen, 2007. "Interim correlated rationalizability," Theoretical Economics, Econometric Society, vol. 2(1), pages 15-40, March.
    8. Tang, Qianfeng, 2010. "Interim Partially Correlated Rationalizability," MPRA Paper 26810, University Library of Munich, Germany.
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    Cited by:

    1. Tang, Qianfeng, 2010. "Interim Partially Correlated Rationalizability," MPRA Paper 26810, University Library of Munich, Germany.

    More about this item

    Keywords

    Games with incomplete information; Correlated equilibrium; The Bayesian solution; Common knowledge; Hierarchies of beliefs.;

    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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