Towards a Characterization of Rational Expectations

Abstract:

R. J. Aumann and J. H. Dr¨ze (2008) define a rational expectation of a player i in a game G as the expected payo of some type of i in some belief system for G in which common knowledge of rationalityand common priors obtain. Our goal is to characterize the set of rational expectations in terms of the game's payoff matrix. We provide such a characterization for a specific class of strategic games, calledsemi-elementary, which includes Myerson's "elementary" games.

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