Correlated Nash equilibrium

Kin Chung Lo

Journal of Economic Theory, 2009, vol. 144, issue 2, 722-743

Abstract: We modify the epistemic conditions for Nash equilibrium only to accommodate Gilboa and Schmeidler's [I. Gilboa, D. Schmeidler, Maxmin expected utility with nonunique prior, J. Math. Econ. 18 (1989) 141-153] maxmin expected utility preferences, and identify the equilibrium concept in n-player strategic games that characterizes the modified epistemic conditions. The epistemic characterization supports the equilibrium concept as a minimal generalization of Nash equilibrium, in the sense that it deviates from Nash equilibrium only in terms of players' attitude towards ambiguity. Consequently, comparing it with Nash equilibrium constitutes a ceteris paribus study of the effects of ambiguity on how a game is played. For example, with ambiguity, (beliefs about) action choices are in general correlated.

Keywords: Agreeing; to; disagree; Ambiguity; Correlated; equilibrium; Epistemic; conditions; Knightian; uncertainty; Maxmin; expected; utility; Multiple; priors; Nash; equilibrium; Stochastic; independence (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:144:y:2009:i:2:p:722-743

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