Analysis of information feedback and selfconfirming equilibrium

Pierpaolo Battigalli (), Simone Cerreia-Vioglio, F. Maccheroni and Massimo Marinacci

Journal of Mathematical Economics, 2016, vol. 66, issue C, 40-51

Abstract: Recent research emphasizes the importance of information feedback in situations of recurrent decisions and strategic interaction, showing how it affects the uncertainty that underlies selfconfirming equilibrium (e.g., Battigalli et al., 2015, Fudenberg and Kamada, 2015). Here, we discuss in detail several properties of this key feature of recurrent interaction and derive relationships. This allows us to elucidate different notions of selfconfirming equilibrium, showing how they are related to each other given the properties of information feedback. In particular, we focus on Maxmin selfconfirming equilibrium, which assumes extreme ambiguity aversion, and we compare it with the partially-specified-probabilities (PSP) equilibrium of Lehrer (2012). Assuming that players can implement any randomization, symmetric Maxmin selfconfirming equilibrium exists under either “observable payoffs,” or “separable feedback.” The latter assumption makes this equilibrium concept essentially equivalent to PSP-equilibrium. If observability of payoffs holds as well, then these equilibrium concepts collapse to mixed Nash equilibrium.

Keywords: Selfconfirming equilibrium; Conjectural equilibrium; Information feedback; Ambiguity aversion; Partially specified probabilities (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Working Paper: Analysis of Information Feedback and Selfconfirming Equilibrium (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:66:y:2016:i:c:p:40-51

DOI: 10.1016/j.jmateco.2016.07.002

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