Critical types

Jeffrey C Ely*, Marcin Peski

*Corresponding author for this work

Research output: Contribution to journalArticle

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 languageEnglish (US)
Pages (from-to)907-937
Number of pages31
JournalReview of Economic Studies
Volume78
Issue number3
DOIs
StatePublished - Dec 28 2011

Keywords

  • Higher-order beliefs
  • Robustness

ASJC Scopus subject areas

  • Economics and Econometrics

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