Oyama, Daisuke and Tercieux, Olivier (2005): On the Strategic Impact of an Event under Non-Common Priors.
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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.
|Item Type:||MPRA Paper|
|Original Title:||On the Strategic Impact of an Event under Non-Common Priors|
|Keywords:||common prior assumption; higher order belief; rationalizability; contagion; belief potential|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information; Mechanism Design
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Daisuke Oyama|
|Date Deposited:||22. Aug 2007|
|Last Modified:||17. Feb 2013 20:54|
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