Independence and Heterogeneity in Games of Incomplete Information

Akos Valentinyi () and Robin Mason

No 4177, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper provides a sufficient condition for the existence and uniqueness of equilibrium in monotone pure strategies, in games of incomplete information. First, we show that if each player's incremental ex post pay-off is uniformly increasing in its own action and type, and its type is sufficiently uninformative of the types of its opponents (independence), then its expected pay-off satisfies a strict single crossing property in its own action and type, for any strategy profile played by its opponents. This ensures that a player's best response to any strategy profile is a monotone pure strategy. Secondly, we show that if, in addition, there is sufficient heterogeneity of the conditional density of types, then the best response correspondence is a contraction mapping. This ensures equilibrium existence and uniqueness. Our approach allows us to establish these results in a wide range of applications, including cases where there are no existing existence results.

Keywords: Incomplete information; Heterogeneity; Existence; Unique pure strategy equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2004-01
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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