Strong robustness to incomplete information and the uniqueness of a correlated equilibrium

Ezra Einy (), Ori Haimanko () and David Lagziel
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Ezra Einy: Ben-Gurion University of the Negev

Economic Theory, 2022, vol. 73, issue 1, No 3, 119 pages

Abstract: Abstract We define and characterize the notion of strong robustness to incomplete information, whereby a Nash equilibrium in a game $$\mathbf{u}$$ u is strongly robust if, given that each player knows that his payoffs are those in $$\mathbf{u}$$ u with high probability, all Bayesian–Nash equilibria in the corresponding incomplete-information game are close—in terms of action distribution—to that equilibrium of $$\mathbf{u}$$ u . We prove, under some continuity requirements on payoffs, that a Nash equilibrium is strongly robust if and only if it is the unique correlated equilibrium. We then review and extend the conditions that guarantee the existence of a unique correlated equilibrium in games with a continuum of actions. The existence of a strongly robust Nash equilibrium is thereby established for several domains of games, including those that arise in economic environments as diverse as Tullock contests, all-pay auctions, Cournot and Bertrand competitions, network games, patent races, voting problems and location games.

Keywords: Strong robustness to incomplete information; Nash equilibrium; Correlated equilibrium; C62; C72; D82 (search for similar items in EconPapers)
Date: 2022
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Working Paper: STRONG ROBUSTNESS TO INCOMPLETE INFORMATION AND THE UNIQUENESS OF A CORRELATED EQUILIBRIUM (2019)
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DOI: 10.1007/s00199-020-01327-4

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