Communication Equilibria and Bounded Rationality
In this paper, we generalize the notion of a communication equilibrium (Forges 1986, Myerson 1986) of a game with incomplete information by introducing two new types of correlation device, namely extended and Bayesian devices. These new devices explicitly model the `thinking process' of the device, i.e. the manner in which it generates outputs conditional on inputs. We proceed to endow these devices with both information processing errors, in the form of non-partitional information, and multiple transition and prior distributions, and prove that these two properties are equivalent in this context, thereby generalizing the result of Brandenburger, Dekel and Geanakoplos (1988). We proceed to discuss the Revelation Principle for each device, and conclude by nesting a certain class of `cheap-talk' equilibria of the underlying game within Bayesian communication equilibria. These so-called fallible talk equilibria cannot be generated by standard communication equilibria.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: CV4 7AL COVENTRY|
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Françoise Forges, 1990. "Equilibria with Communication in a Job Market Example," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 375-398.
- D. Samet, 1987.
"Ignoring Ignorance and Agreeing to Disagree,"
749, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- FORGES, Françoise, .
"An approach to communication equilibria,"
CORE Discussion Papers RP
721, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Shapley, Lloyd S. & Shubik, Martin, 1969. "On market games," Journal of Economic Theory, Elsevier, vol. 1(1), pages 9-25, June.
- Lehrer, Ehud, 1996. "Mediated Talk," International Journal of Game Theory, Springer;Game Theory Society, vol. 25(2), pages 177-88.
When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:955. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margaret Nash)
If references are entirely missing, you can add them using this form.