Interdependent Preferences and Strategic Distinguishability

45 Pages Posted: 30 Sep 2010

See all articles by Dirk Bergemann

Dirk Bergemann

Yale University - Cowles Foundation - Department of Economics; Yale University - Cowles Foundation

Stephen Morris

MIT

Satoru Takahashi

Harvard University - Department of Economics

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Date Written: September 29, 2010

Abstract

A universal type space of interdependent expected utility preference types is constructed from higher-order preference hierarchies describing (i) an agent's (unconditional) preferences over a lottery space; (ii) the agent's preference over Anscombe-Aumann acts conditional on the unconditional preferences; and so on.

Two types are said to be strategically indistinguishable if they have an equilibrium action in common in any mechanism that they play. We show that two types are strategically indistinguishable if and only if they have the same preference hierarchy. We examine how this result extends to alternative solution concepts and strategic relations between types.

Keywords: Interdependent Preferences, Higher-Order Preference Hierarchy, Universal Type Space, Strategic Distinguishability

JEL Classification: C79, D82, D83

Suggested Citation

Bergemann, Dirk and Morris, Stephen Edward and Takahashi, Satoru, Interdependent Preferences and Strategic Distinguishability (September 29, 2010). Cowles Foundation Discussion Paper No. 1772, Available at SSRN: https://ssrn.com/abstract=1684570 or http://dx.doi.org/10.2139/ssrn.1684570

Dirk Bergemann (Contact Author)

Yale University - Cowles Foundation - Department of Economics ( email )

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HOME PAGE: http://www.econ.yale.edu/~dirk/

Yale University - Cowles Foundation

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Stephen Edward Morris

MIT ( email )

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HOME PAGE: http://https://economics.mit.edu/faculty/semorris

Satoru Takahashi

Harvard University - Department of Economics ( email )

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Cambridge, MA 02138
United States

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