CFDP 1822

Correlated Equilibrium in Games with Incomplete Information

Author(s): 

Publication Date: October 2011

Pages: 61

Abstract: 

We define a notion of correlated equilibrium for games with incomplete information in a general setting with finite players, finite actions, and finite states, which we call Bayes correlated equilibrium. The set of Bayes correlated equilibria of a fixed incomplete information game equals the set of probability distributions over actions, states and types that might arise in any Bayes Nash equilibrium where players observed additional information. We show that more information always shrinks the set of Bayes correlated equilibria.

Keywords: 

Correlated equilibrium, Incomplete information, Robust predictions, Information structure

JEL Classification Codes:  C72, D82, D83