Interdependent preferences and strategic distinguishability

Dirk Bergemann, Stephen Morris, Satoru Takahashi

Research output: Contribution to journalArticle

2 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)329-371
Number of pages43
JournalJournal of Economic Theory
Volume168
DOIs
StatePublished - Mar 1 2017

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Hierarchy of preferences
  • Higher order preferences
  • Interdependent preferences
  • Strategic distinguishability

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