hero working papers

Interactive Epistemology and Solution Concepts for Games with Asymmetric Information

Number: 340
Year: 2008
Author(s): Pierpaolo Battigalli, Alfredo Di Tillio, Edoardo Grillo and Antonio Penta
We use an interactive epistemology framework to provide a systematic analysis of some solu- tion concepts for games with asymmetric information. We characterize solution concepts using expressible epistemic assumptions, represented as events in the canonical space generated by primitive uncertainty about the payoff relevant state, payoff irrelevant information, and actions. In most of the paper we adopt an interim perspective, which is appropriate to analyze genuine incomplete information. We relate Delta-rationalizability (Battigalli and Siniscalchi, 2003) to interim correlated rationalizability (Dekel, Fudenberg, and Morris, 2007) and to rationalizability in the interim strategic form. We also consider the ex ante perspective, which is appropriate to ana- lyze asymmetric information about an initial chance move. We prove the equivalence between interim correlated rationalizability and an ex ante notion of correlated rationalizability.

Keywords: asymmetric information, type spaces, Bayesian games, rationalizability