TY - JOUR
T1 - Correlated equilibrium with generalized information structures
AU - Brandenburger, Adam
AU - Dekel, Eddie
AU - Geanakoplos, John
N1 - Funding Information:
* We are indebted to Don Brown for helpful discussions on related work and to Kim Border and a referee for useful comments. Financial support from the Harvard Business School Division of Research, the Miller Institute for Basic Research in Science, NSF Grant SES-8808133 and the Sloan Foundation is gratefully acknowledged.
PY - 1992/4
Y1 - 1992/4
N2 - We study an extension of the notion of correlated equilibrium that allows players to make information processing errors. A typical way in which such errors arise is if players take information at face value, that is, if players do not consider how their information would differ in different states of the world. (This is despite the fact that such considerations could well yield better information.) We model errors such as these by weakening the assumption that players possess information partitions. It is shown that introducing information processing errors is equivalent to allowing "subjectivity," i.e., differences between the players' priors. Hence a bounded rationality justification of subjective priors is provided. We examine in detail the implications of allowing various forms of information processing errors.
AB - We study an extension of the notion of correlated equilibrium that allows players to make information processing errors. A typical way in which such errors arise is if players take information at face value, that is, if players do not consider how their information would differ in different states of the world. (This is despite the fact that such considerations could well yield better information.) We model errors such as these by weakening the assumption that players possess information partitions. It is shown that introducing information processing errors is equivalent to allowing "subjectivity," i.e., differences between the players' priors. Hence a bounded rationality justification of subjective priors is provided. We examine in detail the implications of allowing various forms of information processing errors.
UR - http://www.scopus.com/inward/record.url?scp=38249015265&partnerID=8YFLogxK
U2 - 10.1016/0899-8256(92)90014-J
DO - 10.1016/0899-8256(92)90014-J
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AN - SCOPUS:38249015265
SN - 0899-8256
VL - 4
SP - 182
EP - 201
JO - Games and Economic Behavior
JF - Games and Economic Behavior
IS - 2
ER -