scholarly journals Existence of Structured Perfect Bayesian Equilibrium in Dynamic Games of Asymmetric Information

2020 ◽  
Author(s):  
Deepanshu Vasal
Keyword(s):  
Asymmetric Information ◽  
Dynamic Games ◽  
Perfect Bayesian Equilibrium ◽  
Bayesian Equilibrium

scholarly journals Outsourcing under incomplete information

2017 ◽  
Vol 10 (1) ◽  
pp. 3-15 ◽  
Author(s):  
Tarun Kabiraj ◽  
Uday Bhanu Sinha
Keyword(s):  
Asymmetric Information ◽  
Incomplete Information ◽  
Private Information ◽  
Low Cost ◽  
Complete Information ◽  
Fixed Cost ◽  
Perfect Bayesian Equilibrium ◽  
Content Type ◽  
Bayesian Equilibrium ◽  
Plant Level

Purpose The purpose of this paper is to show that outsourcing can occur as outcome of a separating or pooling perfect Bayesian equilibrium although it is not profitable under complete information. Therefore, asymmetric information can itself be a reason for outsourcing. Design/methodology/approach The present paper constructs a model of two firms interacting in the product market under asymmetric information where one firm has private information about its technological capability, and it has the option to produce inputs in-house or buy inputs from an input market. However, using outsourced inputs involves a fixed cost at the plant level. The model solves for perfect Bayesian equilibrium. Findings There are situations when under complete information, outsourcing of the input will not occur, but, under incomplete information, either only the low-cost type or both high and low-cost types will go for outsourcing, and there always exist reasonable beliefs supporting these equilibria. In particular, when the fixed cost is neither too small not too large, a separating equilibrium occurs in which the low-cost type outsources inputs from the input market but the high-cost type produces in-house; hence, outsourcing signals the firm’s type. Outsourcing by only the high-cost type firm will never occur in equilibrium. Originality/value That incomplete or asymmetric information can itself be a reason for strategic outsourcing is never identified in the literature. The present paper is an attempt to fill this gap and raise the issue of outsourcing in an incomplete information environment.

Perfect Bayesian Equilibrium and Signaling Games

2019 ◽  
pp. 381-457
Author(s):  
Felix Munoz-Garcia ◽  
Daniel Toro-Gonzalez
Keyword(s):  
Signaling Games ◽  
Perfect Bayesian Equilibrium ◽  
Bayesian Equilibrium

Rationalization and Incomplete Information

2003 ◽  
Vol 3 (1) ◽  
Author(s):  
Pierpaolo Battigalli ◽  
Marciano Siniscalchi
Keyword(s):  
Incomplete Information ◽  
Dynamic Games ◽  
Form Solution ◽  
Forward Induction ◽  
First Order ◽  
Bayesian Equilibrium ◽  
Incomplete Information Games ◽  
Games With Incomplete Information ◽  
Intuitive Criterion ◽  
Signalling Games

We analyze a family of extensive-form solution procedures for games with incomplete information that do not require the specification of an epistemic type space a la Harsanyi, but can accommodate a (commonly known) collection of explicit restrictions D on first-order beliefs. For any fixed D we obtain a solution called D-rationalizability.In static games, D-rationalizability characterizes the set of outcomes (combinations of payoff types and strategies) that may occur in any Bayesian equilibrium model consistent with D; these are precisely the outcomes consistent with common certainty of rationality and of the restrictions D. Hence, our approach to the analysis of incomplete-information games is consistent with Harsanyi's, and it may be viewed as capturing the robust implications of Bayesian equilibrium analysis.In dynamic games, D-rationalizability yields a forward-induction refinement of this set of Bayesian equilibrium outcomes. Focusing on the restriction that first-order beliefs be consistent with a given distribution on terminal nodes, we obtain a refinement of self-confirming equilibrium. In signalling games, this refinement coincides with the Iterated Intuitive Criterion.

Study on Dynamic Game Between Banks and Medium-Small Enterprise Based on Perfect Bayesian Equilibrium

2012 ◽  
Vol 6 (1) ◽  
pp. 874-877
Author(s):  
Yanbing Yang ◽  
Biao Zhang ◽  
Bin Liu ◽  
Haiyan Xie
Keyword(s):  
Dynamic Game ◽  
Small Enterprise ◽  
Perfect Bayesian Equilibrium ◽  
Bayesian Equilibrium
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