Correlation of types in Bayesian games

Arbeitspapier

Despite their importance, games with incomplete information and dependent types are poorly understood; only special cases have been considered and a general approach is not yet available. In this paper, we propose a new condition (named richness) for correlation of types in (asymmetric) Bayesian games. Richness is related to the idea that beliefs do not determine preferences and that types should be modeled with two explicit parts: one for payoffs and another for beliefs. With this condition, we are able to provide the first pure strategy equilibrium existence result for a general model of multi-unit auctions with correlated types. We then focus on a special case of richness, called grid distributions, and establish necessary and sufficient conditions for the existence of a symmetric monotonic pure strategy equilibrium in first-price auctions with general levels of correlation. We also provide a polynomial-time algorithm to verify this existence and suggest, using simulations, that the revenue superiority of English auctions may not hold for positively correlated types in general.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 1556

Classification and Topics

• Classification: Wirtschaft ; Existence and Stability Conditions of Equilibrium ; Noncooperative Games ; Auctions ; Asymmetric and Private Information; Mechanism Design
• Subject: dependence of types ; pure strategy equilibrium existence ; affiliation ; games with incomplete information ; quasi-supermodular games ; revenue ranking of auctions ; dependence of types ; pure strategy equilibrium existence ; affiliation ; games with incomplete information ; quasi-supermodular games ; revenue ranking of auctions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): De Castro, Luciano
• Event: Veröffentlichung
• (who): Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
• (where): Evanston, IL
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/97252
• Last update: 10.03.2025, 11:43 AM CET