The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Epistemic Game Theory: Incomplete Information

  • Aviad Heifetz
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2663

Abstract

In a game of incomplete information some of the players possess private information which may be relevant to the strategic interaction. Private information is modelled by a type space, in which every type of each player is associated with a belief about the basic issues of uncertainty (like payoffs) and about the other players’ types. At a Bayesian equilibrium each type chooses a strategy which maximizes its expected payoff given the choice of strategies by the other players’ types. Bayesian equilibrium payoffs are often inefficient relative to the equilibrium payoffs that would result had the players been fully informed.

Keywords

Bayesian equilibrium Bayesian strategies Common knowledge Epistemic game theory: incomplete information Games with incomplete information Private information 

JEL Classifications

C7 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Aviad Heifetz
    • 1
  1. 1.