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Economic Theory

, Volume 56, Issue 2, pp 219–249 | Cite as

Bayesian games with unawareness and unawareness perfection

  • Martin MeierEmail author
  • Burkhard C. Schipper
Research Article

Abstract

Applying unawareness belief structures introduced in Heifetz et al. (Games Econ Behav 77:100–121, 2013a), we develop Bayesian games with unawareness, define equilibrium, and prove existence. We show how equilibria are extended naturally from lower to higher awareness levels and restricted from higher to lower awareness levels. We apply Bayesian games with unawareness to investigate the robustness of equilibria to uncertainty about opponents’ awareness of actions. We show that a Nash equilibrium of a strategic game is robust to unawareness of actions if and only if it is not weakly dominated. Finally, we discuss the relationship between standard Bayesian games and Bayesian games with unawareness.

Keywords

Unawareness Awareness Type-space Incomplete information Bayesian games Equilibrium Perfection  Undominated equilibrium  Weak dominance Admissibility  Inattention 

JEL Classification

C70 C72 D80 D82 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Institut für Höhere StudienViennaAustria
  2. 2.Department of EconomicsUniversity of CaliforniaDavisUSA

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