Signaling and mediation in games with common interests

Ehud Lehrer, Dinah Rosenberg, Eran Shmaya*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

25 Scopus citations

Abstract

Players who have a common interest are engaged in a game with incomplete information. Before playing they get differential stochastic signals that depend on the actual state of nature. These signals provide the players with partial information about the state of nature and may also serve as a means of correlation. Different information structures induce different outcomes. An information structure is better than another, with respect to a certain solution concept, if the highest solution payoff it induces is at least that induced by the other structure. This paper characterizes the situation where one information structure is better than another with respect to various solution concepts: Nash equilibrium, strategic-normal-form correlated equilibrium, agent-normal-form correlated equilibrium and belief-invariant Bayesian solution. These solution concepts differ from one another in the scope of communication allowed between the players. The characterizations use maps that stochastically translate signals of one structure to signals of another.

Original languageEnglish (US)
Pages (from-to)670-682
Number of pages13
JournalGames and Economic Behavior
Volume68
Issue number2
DOIs
StatePublished - Mar 2010

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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