scholarly journals Incomplete Information Games with Ambiguity Averse Players

2020 ◽  
Vol 12 (2) ◽  
pp. 135-187
Author(s):  
Eran Hanany ◽  
Peter Klibanoff ◽  
Sujoy Mukerji
Keyword(s):  
Incomplete Information ◽  
Strategic Behavior ◽  
Ambiguity Aversion ◽  
Bayesian Updating ◽  
Incomplete Information Games ◽  
Information Set ◽  
Information Games

We study incomplete information games with ambiguity averse players. Our focus is on equilibrium concepts satisfying sequential optimality—each player’s strategy is optimal at each information set given opponents’ strategies. We show sequential optimality, which does not make any explicit assumption on updating, is equivalent to sequential optimality with respect to beliefs updated using a particular generalization of Bayesian updating. Ambiguity aversion expands the set of equilibria compatible with players sharing common ambiguous beliefs. We connect ambiguity aversion with belief robustness. Examples illustrate new strategic behavior, including strategic use of ambiguity, under ambiguity aversion. (JEL C73, D81, D83)

Strategic Interaction and Interstate Crises: A Bayesian Quantal Response Estimator for Incomplete Information Games

2008 ◽  
Vol 16 (3) ◽  
pp. 250-273 ◽  
Author(s):  
Justin Esarey ◽  
Bumba Mukherjee ◽  
Will H. Moore
Keyword(s):  
Asymmetric Information ◽  
Incomplete Information ◽  
Learning Process ◽  
Private Information ◽  
Statistical Treatment ◽  
Quantal Response ◽  
Crisis Bargaining ◽  
Incomplete Information Games ◽  
Information Characteristics ◽  
Information Games

Private information characteristics like resolve and audience costs are powerful influences over strategic international behavior, especially crisis bargaining. As a consequence, states face asymmetric information when interacting with one another and will presumably try to learn about each others' private characteristics by observing each others' behavior. A satisfying statistical treatment would account for the existence of asymmetric information and model the learning process. This study develops a formal and statistical framework for incomplete information games that we term the Bayesian Quantal Response Equilibrium Model (BQRE model). Our BQRE model offers three advantages over existing work: it directly incorporates asymmetric information into the statistical model's structure, estimates the influence of private information characteristics on behavior, and mimics the temporal learning process that we believe takes place in international politics.

Military Capabilities and Escalation: A Correction to Bueno de Mesquita, Morrow, and Zorick

2000 ◽  
Vol 94 (2) ◽  
pp. 425-427 ◽  
Author(s):  
M. Cristina Molinari
Keyword(s):  
Incomplete Information ◽  
Armed Conflict ◽  
Incomplete Information Games ◽  
The Relationship ◽  
Information Games

Bueno de Mesquita, Morrow, and Zorick analyze the evolution of crises as a two-sided incomplete information game in order to illuminate the relationship between observable military capabilities and the escalation of a dispute to armed conflict. I show that an error in the derivation of the equilibria invalidates their conclusions, and I offer a few suggestions on how to model the evolution of crises as incomplete information games.

scholarly journals A systematic procedure for finding Perfect Bayesian Equilibria in Incomplete Information Games

2012 ◽  
Vol 6 (1) ◽  
Author(s):  
Felix Munoz-Garcia
Keyword(s):  
Industrial Organization ◽  
Incomplete Information ◽  
Pure Strategy ◽  
Solution Concept ◽  
Signaling Game ◽  
Systematic Procedure ◽  
Incomplete Information Games ◽  
Step Procedure ◽  
Information Games

Abstract This paper provides a non-technical introduction to a procedure to find Perfect Bayesian equilibria (PBEs) in incomplete information games. Despite the rapidly expanding literature on industrial organization that uses PBE as its main solution concept, most undergraduate and graduate textbooks still present a relatively theoretical introduction to PBEs. This paper offers a systematic five-step procedure that helps students find all pure-strategy PBEs in incomplete information games. Furthermore, it illustrates a step-by-step application of this procedure to a signaling game, using a worked-out example.

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