### Abstract

Original language | English |
---|---|

Place of Publication | Tilburg |

Publisher | Microeconomics |

Number of pages | 51 |

Volume | 2007-46 |

Publication status | Published - 2007 |

### Publication series

Name | CentER Discussion Paper |
---|---|

Volume | 2007-46 |

### Fingerprint

### Keywords

- Network games
- incomplete information
- higher order beliefs
- continuity
- random networks
- population uncertainty

### Cite this

*Beliefs in Network Games (Replaced by CentER DP 2008-05)*. (CentER Discussion Paper; Vol. 2007-46). Tilburg: Microeconomics.

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**Beliefs in Network Games (Replaced by CentER DP 2008-05).** / Kets, W.

Research output: Working paper › Discussion paper › Other research output

TY - UNPB

T1 - Beliefs in Network Games (Replaced by CentER DP 2008-05)

AU - Kets, W.

N1 - Pagination: 51

PY - 2007

Y1 - 2007

N2 - Networks can have an important effect on economic outcomes. Given the complexity of many of these networks, agents will generally not know their structure. We study the sensitivity of game-theoretical predictions to the specification of players’ (common) prior on the network in a setting where players play a fixed game with their neighbors and only have local information on the network structure. We show that two priors are close in a strategic sense if and only if (1) the priors assign similar probabilities to all events that involve a player and his neighbors, and (2) with high probability, a player believes, given his type, that his neighbors’ conditional beliefs are similar, and that his neighbors believe, given their type, that. . . the conditional beliefs of their neighbors are similar, for any number of iterations. Also, we show that the common but unrealistic assumptions that the size of the network is common knowledge or that the types of players are independent are far from innocuous: if these assumptions are violated, small probability events can have a large effect on outcomes through players’ conditional beliefs.

AB - Networks can have an important effect on economic outcomes. Given the complexity of many of these networks, agents will generally not know their structure. We study the sensitivity of game-theoretical predictions to the specification of players’ (common) prior on the network in a setting where players play a fixed game with their neighbors and only have local information on the network structure. We show that two priors are close in a strategic sense if and only if (1) the priors assign similar probabilities to all events that involve a player and his neighbors, and (2) with high probability, a player believes, given his type, that his neighbors’ conditional beliefs are similar, and that his neighbors believe, given their type, that. . . the conditional beliefs of their neighbors are similar, for any number of iterations. Also, we show that the common but unrealistic assumptions that the size of the network is common knowledge or that the types of players are independent are far from innocuous: if these assumptions are violated, small probability events can have a large effect on outcomes through players’ conditional beliefs.

KW - Network games

KW - incomplete information

KW - higher order beliefs

KW - continuity

KW - random networks

KW - population uncertainty

M3 - Discussion paper

VL - 2007-46

T3 - CentER Discussion Paper

BT - Beliefs in Network Games (Replaced by CentER DP 2008-05)

PB - Microeconomics

CY - Tilburg

ER -