On the Strategic Impact of an Event under Non-Common Priors

Daisuke Oyama and Olivier Tercieux

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies the impact of a small probability event on strategic behavior in incomplete information games with non-common priors. It is shown that the global impact of a small probability event (i.e., its propensity to affect strategic behavior at all states in the state space) has an upper bound that is an increasing function of a measure of discrepancy from the common prior assumption. In particular, its global impact can be arbitrarily large under non-common priors, but is bounded from above under common priors. These results quantify the different implications common prior and non-common prior models have on the (infinite) hierarchies of beliefs.

Keywords: common prior assumption; higher order belief; rationalizability; contagion; belief potential (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2005-12-31
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: On the strategic impact of an event under non-common priors (2012)
Working Paper: On the Strategic Impact of an Event under Non-Common Priors (2012)
Working Paper: On the Strategic Impact of an Event under Non-Common Priors (2012)
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