Ulric B. and Evelyn L. Bray Social Sciences Seminar

Abstract: We study (interim correlated) rationalizability in games with in-complete information. For each given game, we characterize the re-cursive set of possible rationalizable hierarchies through a finite automaton, and provide a revelation principle that characterizes the distributions over these hierarchies that arise from any common prior. We show that a simple and finitely parameterized class of information structures is sufficient to generate every outcome distribution induced by general common prior information structures. Using this result, we characterize the set of rationalizable distributions as a convex polyhedron as well as sufficient classes of information structures to induce all rationalizable distributions.

Joint work with Rafael Veiel (MIT)