Interdependent Preferences and Strategic Distinguishability

52 Pages Posted: 20 Jul 2014

See all articles by Dirk Bergemann

Dirk Bergemann

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

Stephen Morris

MIT

Satoru Takahashi

National University of Singapore (NUS) - Department of Economics

Multiple version iconThere are 5 versions of this paper

Date Written: July 18, 2014

Abstract

We identify a universal type space of possible interdependent (expected utility) preferences of a group of agents satisfying two criteria. First, a type consists of a "detail free" description, in a natural language, of the agents' interdependent preferences. Second, distinct types in the universal type space must be "strategically distinguishable" in the sense that there must exist a mechanism where those types are guaranteed to behave differently in equilibrium.

Our results generalize and unify results of Abreu and Matsushima (1992b) (who characterized strategic distinguishability on fixed finite type spaces) and Dekel, Fudenberg, and Morris (2006), (2007) (who characterized strategic distinguishability on type spaces without preference uncertainty and thus without interdependent preferences).

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 (July 18, 2014). Cowles Foundation Discussion Paper No. 1772RR, Available at SSRN: https://ssrn.com/abstract=2468259 or http://dx.doi.org/10.2139/ssrn.2468259

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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Satoru Takahashi

National University of Singapore (NUS) - Department of Economics ( email )

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Singapore 117570, Singapore 119077
Singapore

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