Critical types

Jeffrey C. Ely; Marcin Peski

doi:10.1093/restud/rdq035

Critical types

Jeffrey C. Ely^*, Marcin Peski

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

11 Scopus citations

Abstract

How can we know in advance whether simplifying assumptions about beliefs will make a difference in the conclusions of game-theoretic models? We define critical types to be types whose rationalizable correspondence is sensitive to assumptions about arbitrarily high-order beliefs. We show that a type is critical if and only if it exhibits common belief in some non-trivial event. We use this characterization to show that all types in commonly used type spaces are critical. On the other hand, we show that regular types (types that are not critical) are generic, although perhaps inconvenient to use in applications.

Original language	English (US)
Pages (from-to)	907-937
Number of pages	31
Journal	Review of Economic Studies
Volume	78
Issue number	3
DOIs	https://doi.org/10.1093/restud/rdq035
State	Published - Jul 1 2011

Keywords

Higher-order beliefs
Robustness

ASJC Scopus subject areas

Economics and Econometrics

Access to Document

10.1093/restud/rdq035

Cite this

@article{23071b241aec4aa4963f8d54bd45fbd1,

title = "Critical types",

abstract = "How can we know in advance whether simplifying assumptions about beliefs will make a difference in the conclusions of game-theoretic models? We define critical types to be types whose rationalizable correspondence is sensitive to assumptions about arbitrarily high-order beliefs. We show that a type is critical if and only if it exhibits common belief in some non-trivial event. We use this characterization to show that all types in commonly used type spaces are critical. On the other hand, we show that regular types (types that are not critical) are generic, although perhaps inconvenient to use in applications.",

keywords = "Higher-order beliefs, Robustness",

author = "Ely, {Jeffrey C.} and Marcin Peski",

note = "Funding Information: Acknowledgment. Both authors acknowledge National Science Foundation grant #0958856. We thank Yi-Chun Chen for outstanding research assistance. We are grateful to the editor, Andrea Prat, and three anonymous referees for detailed comments. We also thank Muhamet Yildiz for suggestions that helped improve the exposition. We take all the blame.",

year = "2011",

month = jul,

day = "1",

doi = "10.1093/restud/rdq035",

language = "English (US)",

volume = "78",

pages = "907--937",

journal = "Review of Economic Studies",

issn = "0034-6527",

publisher = "Oxford University Press",

number = "3",

}

TY - JOUR

T1 - Critical types

AU - Ely, Jeffrey C.

AU - Peski, Marcin

N1 - Funding Information: Acknowledgment. Both authors acknowledge National Science Foundation grant #0958856. We thank Yi-Chun Chen for outstanding research assistance. We are grateful to the editor, Andrea Prat, and three anonymous referees for detailed comments. We also thank Muhamet Yildiz for suggestions that helped improve the exposition. We take all the blame.

PY - 2011/7/1

Y1 - 2011/7/1

N2 - How can we know in advance whether simplifying assumptions about beliefs will make a difference in the conclusions of game-theoretic models? We define critical types to be types whose rationalizable correspondence is sensitive to assumptions about arbitrarily high-order beliefs. We show that a type is critical if and only if it exhibits common belief in some non-trivial event. We use this characterization to show that all types in commonly used type spaces are critical. On the other hand, we show that regular types (types that are not critical) are generic, although perhaps inconvenient to use in applications.

AB - How can we know in advance whether simplifying assumptions about beliefs will make a difference in the conclusions of game-theoretic models? We define critical types to be types whose rationalizable correspondence is sensitive to assumptions about arbitrarily high-order beliefs. We show that a type is critical if and only if it exhibits common belief in some non-trivial event. We use this characterization to show that all types in commonly used type spaces are critical. On the other hand, we show that regular types (types that are not critical) are generic, although perhaps inconvenient to use in applications.

KW - Higher-order beliefs

KW - Robustness

UR - http://www.scopus.com/inward/record.url?scp=84255170683&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84255170683&partnerID=8YFLogxK

U2 - 10.1093/restud/rdq035

DO - 10.1093/restud/rdq035

M3 - Article

AN - SCOPUS:84255170683

VL - 78

SP - 907

EP - 937

JO - Review of Economic Studies

JF - Review of Economic Studies

SN - 0034-6527

IS - 3

ER -

Critical types

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this