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Full-Text Articles in Social and Behavioral Sciences
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Cowles Foundation Discussion Papers
A universal type space of interdependent expected utility preference types is constructed from higher-order preference hierarchies describing (i) an agent’s (unconditional) preferences over a lottery space; (ii) the agent’s preference over Anscombe-Aumann acts conditional on the unconditional preferences; and so on. Two types are said to be strategically indistinguishable if they have an equilibrium action in common in any mechanism that they play. We show that two types are strategically indistinguishable if and only if they have the same preference hierarchy. We examine how this result extends to alternative solution concepts and strategic relations between types.
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Cowles Foundation Discussion Papers
A universal type space of interdependent expected utility preference types is constructed from higher-order preference hierarchies describing (i) an agent’s (unconditional) preferences over a lottery space; (ii) the agent’s preference over Anscombe-Aumann acts conditional on the unconditional preferences; and so on. Two types are said to be strategically indistinguishable if they have an equilibrium action in common in any mechanism that they play. We show that two types are strategically indistinguishable if and only if they have the same preference hierarchy. We examine how this result extends to alternative solution concepts and strategic relations between types.
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Cowles Foundation Discussion Papers
We identify a universal type space of possible interdependent (expected utility) preferences of a group of agents satisfying two criteria. First, a type consists of a “detail free” description, in a natural language, of the agents’ interdependent preferences. Second, distinct types in the universal type space must be “strategically distinguishable” in the sense that there must exist a mechanism where those types are guaranteed to behave differently in equilibrium. Our results generalize and unify results of Abreu and Matsushima (1992b) (who characterized strategic distinguishability on fixed finite type spaces) and Dekel, Fudenberg, and Morris (2006), (2007) (who characterized strategic distinguishability …
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Interdependent Preferences And Strategic Distinguishability, Dirk Bergemann, Stephen Morris, Satoru Takahashi
Cowles Foundation Discussion Papers
We study agents whose expected utility preferences are interdependent for informational or psychological reasons. We characterize when two types can be “strategically distinguished” in the sense that they are guaranteed to behave differently in some finite mechanism. We show that two types are strategically distinguishable if and only if they have different hierarchies of interdependent preferences. The same characterization applies for rationalizability, equilibrium, and any interim solution concept in between. Our results generalize and unify results of Abreu and Matsushima (1992), who characterize strategic distinguishability on fixed finite type spaces, and Dekel, Fudenberg, and Morris (2006), (2007), who characterize strategic …