Characterizing the Strategic Impact of Misspecified Beliefs

Yi-Chun Chen, Alfredo Di Tillio, Eduardo Faingold () and Siyang Xiong

The Review of Economic Studies, 2017, vol. 84, issue 4, 1424-1471

Abstract: Previous research has established that the predictions of game theory are quite sensitive to the assumptions made about the players’ beliefs. We evaluate the severity of this robustness problem by characterizing conditions on the primitives of the model—the players’ beliefs and higher-order beliefs about the payoff-relevant parameters—for the behaviour of a given Harsanyi type to be approximated by the behaviour of (a sequence of) perturbed types. This amounts to providing belief-based characterizations of the strategic topologies of Dekel et al. (2006). We apply our characterizations to a variety of questions concerning robustness to perturbations of higher-order beliefs, including genericity of types that are consistent with a common prior, and we investigate the connections between our notions of robustness and the notion of common $p$-belief of Monderer and Samet (1989).

Keywords: Games with incomplete information; Rationalizability; Higher-order beliefs; Robustness (search for similar items in EconPapers)
JEL-codes: C70 C72 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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