Intrinsic correlation in games

Adam Brandenburger, Amanda Friedenberg

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Correlations arise naturally in noncooperative games, e.g., in the equivalence between undominated and optimal strategies in games with more than two players. But the noncooperative assumption is that players do not coordinate their strategy choices, so where do these correlations come from? The epistemic view of games gives an answer. Under this view, the players' hierarchies of beliefs (beliefs, beliefs about beliefs, etc.) about the strategies played in the game are part of the description of a game. This gives a source of correlation: A player believes other players' strategy choices are correlated, because he believes their hierarchies of beliefs are correlated. We refer to this kind of correlation as "intrinsic,"since it comes from variables-viz., the hierarchies of beliefs-that are part of the game. We compare the intrinsic route with the "extrinsic"route taken by Aumann (1974), which adds signals to the original game.

Original languageEnglish (US)
Title of host publicationWorld Scientific Series in Economic Theory
EditorsAdam Brandenburger
PublisherWorld Scientific
Pages59-111
Number of pages53
DOIs
StatePublished - Sep 1 2023

Publication series

NameWorld Scientific Series in Economic Theory
Volume5
ISSN (Print)2251-2071

Keywords

  • conditional independence
  • correlated equilibrium
  • Correlation
  • epistemic game theory
  • intrinsic correlation
  • rationalizability

ASJC Scopus subject areas

  • Economics and Econometrics
  • Statistics, Probability and Uncertainty
  • Applied Mathematics
  • Statistics and Probability

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