Template-Type: ReDIF-Paper 1.0
Author-Name: Burkhard Schipper
Author-Name-First: Burkhard
Author-Name-Last: Schipper
Author-Name: Martin Meier
Author-Name-First: Martin
Author-Name-Last: Meier
Author-Workplace-Name: Department of Economics, University of California Davis
Title: Bayesian Games with Unawareness and Unawareness Perfection
Abstract: Applying unawareness belief structures introduced in Heifetz, Meier, and Schipper (2013a), we develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are extended naturally from lower to higher awareness levels and restricted from higher to lower awareness levels. We apply Bayesian games with unawareness to investigate the robustness of equilibria to uncertainty about opponents' awareness of actions. We show that a Nash equilibrium of a strategic game is robust to unawareness of actions if and only if it is not weakly dominated. Finally, we discuss the relationship between standard Bayesian games and Bayesian games with unawareness.
Length: 33
File-URL: https://repec.dss.ucdavis.edu/files/gpF1XwFsGdmAVZC2BCALyYPS/13-9.pdf
File-Format: application/pdf
Number: 304
Classification-JEL: C70, C72, D80, D82
KeyWords: Unawareness, awareness, type-space, incomplete information, Bayesian games, equilibrium, perfection, undominated equilibrium, weak dominance, admissibility, inattention
Creation-Date: 20130912
Handle: RePEc:cda:wpaper:304