Robust equilibria under non-common priors

Daisuke Oyama and Olivier Tercieux ()
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Olivier Tercieux: PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This paper considers the robustness of equilibria to a small amount of incomplete information, where players are allowed to have heterogeneous priors. An equilibrium of a complete information game is robust to incomplete information under non-common priors if for every incomplete information game where each player's prior assigns high probability on the event that the players know at arbitrarily high order that the payoffs are given by the complete information game, there exists a Bayesian Nash equilibrium that generates behavior close to the equilibrium in consideration. It is shown that for generic games, an equilibrium is robust under non-common priors if and only if it is the unique rationalizable action profile. Set-valued concepts are also introduced, and for generic games, a smallest robust set is shown to exist and coincide with the set of a posteriori equilibria.

Keywords: Robustness; Common prior assumption; Higher order belief; Incomplete information (search for similar items in EconPapers)
Date: 2010-03
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Citations: View citations in EconPapers (11)

Published in Journal of Economic Theory, 2010, 145 (2), pp.752-784. ⟨10.1016/j.jet.2009.10.009⟩

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Related works:
Journal Article: Robust equilibria under non-common priors (2010)
Working Paper: Robust equilibria under non-common priors (2010)
Working Paper: Robust Equilibria under Non-Common Priors (2007)
Working Paper: Robust Equilibria under Non-Common Priors (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-00754466

DOI: 10.1016/j.jet.2009.10.009

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