Strategic knowledge sharing in Bayesian games

Abstract This paper provides a model for the study of direct, public and strategic knowledge sharing in Bayesian games. We propose an equilibrium concept which takes into account communication possibilities of exogenously certifiable statements and in which beliefs off the equilibrium path are explicitly deduced from consistent possibility correspondences, without making reference to perturbed games. Properties of such an equilibrium and of revised knowledge are examined. In particular, it is shown that our equilibrium is always a sequential equilibrium of the associated extensive form game with communication. Finally, sufficient conditions for the existence of perfectly revealing or non-revealing equilibria are characterized in some classes of games. Several examples and economic applications are investigated.

[1]  R. Myerson.  MULTISTAGE GAMES WITH COMMUNICATION , 1984 .

[2]  David M. Kreps,et al.  Sequential Equilibria Author ( s ) : , 1982 .

[3]  S. Hart,et al.  Long Cheap Talk , 2003 .

[4]  Strategic Knowledge Sharing in Bayesian Games: Applications , 2002 .

[5]  Michael Raith.  A General Model of Information Sharing in Oligopoly , 1993 .

[6]  John C. Harsanyi,et al.  Games with Incomplete Information Played by "Bayesian" Players, I-III: Part I. The Basic Model& , 2004, Manag. Sci..

[7]  Elchanan Ben-Porath,et al.  Cheap talk in games with incomplete information , 2003, J. Econ. Theory.

[8]  Paul R. Milgrom,et al.  Relying on the Information of Interested Parties , 1985 .

[9]  K. Hagerty,et al.  The Optimal Amount of Discretion to Allow in Disclosure , 1990 .

[10]  Daniel J. Seidmann,et al.  Strategic Information Transmission with Verifiable Messages , 1997 .

[11]  D. Fudenberg,et al.  Perfect Bayesian equilibrium and sequential equilibrium , 1991 .

[12]  Ronald Fagin,et al.  Reasoning about knowledge , 1995 .

[13]  R. Selten.  Reexamination of the perfectness concept for equilibrium points in extensive games , 1975, Classics in Game Theory.

[14]  Sanford J. Grossman.  The Informational Role of Warranties and Private Disclosure about Product Quality , 1981, The Journal of Law and Economics.

[15]  J. Sobel,et al.  STRATEGIC INFORMATION TRANSMISSION , 1982 .

[16]  Ariel Rubinstein,et al.  Debates and Decisions: On a Rationale of Argumentation Rules , 2001, Games Econ. Behav..

[17]  Andrew Postlewaite,et al.  Strategic Information Revelation , 1990 .

[18]  T. Palfrey,et al.  Private Information in Large Economies , 1986 .

[19]  J. Geanakoplos,et al.  We Can't Disagree Forever , 1982 .

[20]  Barton L. Lipman,et al.  Current Draft , 1994 .

[21]  H. Shin.  The Burden of Proof in a Game of Persuasion , 1994 .

[22]  Paul R. Milgrom,et al.  Good News and Bad News: Representation Theorems and Applications , 1981 .

[23]  Asher Wolinsky.  Information transmission when the sender's preferences are uncertain , 2003, Games Econ. Behav..

[24]  Rohit Parikh,et al.  Communication, consensus, and knowledge , 1990 .

[25]  Frédéric Koessler,et al.  Persuasion games with higher-order uncertainty , 2003, J. Econ. Theory.

[26]  H. Shin.  News Management and the Value of Firms , 1994 .

[27]  Paul J. Krasucki.  Protocols Forcing Consensus , 1996 .

[28]  Frédéric Koessler.  Strategic Knowledge Sharing in Bayesian Games: A General Model , 2002 .

[29]  Dino Gerardi,et al.  Unmediated Communication in Games with Complete and Incomplete Information , 2002, J. Econ. Theory.

[30]  Andrew Postlewaite,et al.  Implementation in differential information economies , 1986 .

[31]  Jerry R. Green,et al.  Partially Verifiable Information and Mechanism Design , 1986 .