 Common priors under endogenous uncertaintyPierfrancesco Guarino and Elias Tsakas Journal of Economic Theory, 2021, vol. 194, issue C Abstract: For a fixed game and a type structure that admits a common prior, Action Independence states that the conditional beliefs induced by the common prior do not depend on the players' own strategies. It has been conjectured that Action Independence can be behaviorally characterized by means of a suitable no-betting condition (Dekel and Siniscalchi, 2015), but whether this is indeed the case remains an open problem. In this paper, we prove this conjecture true by focusing on strategy-invariant bets, which are bets that cannot be manipulated by the players. In particular, first, we show that at least one of the common priors satisfies Action Independence if and only if there exists no mutually acceptable strategy-invariant bet among the players. Second, we show that, all common priors satisfy Action Independence if and only if there exists no mutually acceptable strategy-invariant bet among the players and an outside observer. These results give us a deeper understanding of existing foundations of solution concepts using only epistemic conditions that are expressed in terms of type structures and are therefore elicitable. Keywords: Common prior; No-betting condition; Endogenous uncertainty; Action independence; Strategy-invariant bets (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:194:y:2021:i:c:s0022053121000715 DOI: 10.1016/j.jet.2021.105254 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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