Bayesian Ignorance

Noga Alon, Yuval Emek, Michal Feldman and Moshe Tennenholtz

Discussion Paper Series from The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem

Abstract: We quantify the effect of Bayesian ignorance by comparing the social cost obtained in a Bayesian game by agents with local views to the expected social cost of agents having global views. Both benevolent agents, whose goal is to minimize the social cost, and selfish agents, aiming at minimizing their own individual costs, are considered. When dealing with selfish agents, we consider both best and worst equilibria outcomes. While our model is general, most of our results concern the setting of network cost sharing (NCS) games. We provide tight asymptotic results on the effect of Bayesian ignorance in directed and undirected NCS games with benevolent and selfish agents. Among our findings we expose the counter-intuitive phenomenon that ignorance is bliss: Bayesian ignorance may substantially improve the social cost of selfish agents. We also prove that public random bits can replace the knowledge of the common prior in attempt to bound the effect of Bayesian ignorance in settings with benevolent agents. Together, our work initiates the study of the effects of local vs. global views on the social cost of agents in Bayesian contexts.

Keywords: Bayesian games; local vs. global view; network cost sharing (search for similar items in EconPapers)
Pages: 16 pages
Date: 2010-02
New Economics Papers: this item is included in nep-gth
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