CFDP 1973R

Informational Robustness and Solution Concepts

Author(s): 

Publication Date: December 2014

Revision Date: July 2015

Pages: 34

Abstract: 

Consider the following “informational robustness” question: what can we say about the set of outcomes that may arise in equilibrium of a Bayesian game if players may observe some additional information? This set of outcomes will correspond to a solution concept that is weaker than equilibrium, with the solution concept depending on what restrictions are imposed on the additional information.

We describe a unified approach encompassing prior informational robustness results, as well as identifying the solution concept that corresponds to no restrictions on the additional information; this version of rationalizability depends only on the support of players’ beliefs and implies novel predictions in classic economic environments of coordination and trading games.

Our results generalize from complete to incomplete information the classical results in Aumann (1974, 1987) and Brandenburger and Dekel (1987) which can be (and were) given informational robustness interpretations. We discuss the relation between informational robustness and “epistemic” foundations of solution concepts.

Keywords: 

Incomplete information, Informational robustness, Bayes correlated equilibrium, Interim corrrelated rationalizability, Belief free rationalizability

JEL Classification Codes:  C72, C79, D82, D83