A Bayesian potential game to illustrate heterogeneity in cost/benefit characteristics

Arsen Palestini () and Ilaria Poggio ()

International Review of Economics, 2015, vol. 62, issue 1, 23-39

Abstract: We employ the theory of Bayesian potential games to characterize pure-strategy equilibria of a Bayesian game with finite type structures, taking into account the cost/benefit features of agents. Building on a standard model of oligopolistic competition also applicable to environmental issues such as profit maximization in presence of an externality affecting all players, we rely on types to describe their heterogeneity. When the damage functions are additively separable, the potential provides necessary and sufficient conditions to ensure monotonicity of pure strategies. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Bayesian game; Potential; Pure-strategy equilibrium; Heterogeneity; Cost/benefit; C70; D82 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s12232-014-0221-9

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