Publication Date: September 2010
Revision Date: August 2016
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, Fudenberg, and Morris (2006), (2007), who characterize strategic distinguishability without interdependent preferences.
Interdependent preferences, Higher-order preference hierarchy, Hierarchy of Preferences, Strategic distinguishability
JEL Classification Codes: C79, D82, D83