TY - JOUR
T1 - Interdependent preferences and strategic distinguishability
AU - Bergemann, Dirk
AU - Morris, Stephen
AU - Takahashi, Satoru
N1 - Funding Information:
The first two authors acknowledge financial support through NSF Grants SES 0851200 and 1215808. We are grateful for valuable and detailed comments from the editor, Marciano Siniscalchi, an associate editor and two referees, as well as seminar/conference participants at Bocconi, Columbia, Chicago, Harvard/MIT, HEC, Kyoto, Northwestern, NYU, Oxford, Penn, SAET, Yale, Warwick and the Econometric Society World Congress in Shanghai. We acknowledge valuable research assistance from Áron Tóbiás.
Publisher Copyright:
© 2017
PY - 2017/3/1
Y1 - 2017/3/1
N2 - 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 et al. (2006, 2007), who characterize strategic distinguishability without interdependent preferences.
AB - 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 et al. (2006, 2007), who characterize strategic distinguishability without interdependent preferences.
KW - Hierarchy of preferences
KW - Higher order preferences
KW - Interdependent preferences
KW - Strategic distinguishability
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U2 - 10.1016/j.jet.2017.01.002
DO - 10.1016/j.jet.2017.01.002
M3 - Article
AN - SCOPUS:85009071357
SN - 0022-0531
VL - 168
SP - 329
EP - 371
JO - Journal of Economic Theory
JF - Journal of Economic Theory
ER -