The robustness of equilibria to incomplete information

Atsushi Kajii, Stephen Morris

Research output: Contribution to journalArticle

123 Scopus citations

Abstract

A number of papers have shown that a strict Nash equilibrium action profile of a game may never be played if there is a small amount of incomplete information (see, for example, Carlsson and van Damme (1993a)). We present a general approach to analyzing the robustness of equilibria to a small amount of incomplete information. A Nash equilibrium of a complete information game is said to be robust to incomplete information if every incomplete information game with payoffs almost always given by the complete information game has an equilibrium which generates behavior close to the Nash equilibrium. We show that many games with strict equilibria have no robust equilibrium and examine why we get such different results from existing refinements. If a game has a unique correlated equilibrium, it is robust. A natural many-player many-action generalization of risk dominance is a sufficient condition for robustness.

Original languageEnglish (US)
Pages (from-to)1283-1309
Number of pages27
JournalEconometrica
Volume65
Issue number6
DOIs
StatePublished - Nov 1997

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Higher order beliefs
  • Incomplete information
  • Refinements
  • Robustness

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