On the Strategic Impact of an Event under Non-Common Priors
Article dans une revue: 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.
Auteur(s)
Oyama Daisuke, Olivier Tercieux
Revue
- Games and Economic Behavior
Date de publication
- 2012
Mots-clés JEL
Mots-clés
- Common prior assumption
- Higher order belief
- Rationalizability
- Contagion
- Belief potential
Pages
- 321-331
URL de la notice HAL
Version
- 1
Volume
- 74