e-journal
Knowing one’s future preferences: A correlated agent model with Bayesian updating
We generalize two classes of statistical sequential incomplete information games: (1) those
resembling typical signaling games, in which a single agent represents each player, allowing for
information to be revealed about future play; and (2) those in which each player is represented
by a set of independent agents, where moves do not reveal private information. The generalized
model we develop, the Correlated Agent Model, relies on a parameter, ρ, which denotes the correlation
between two agents’ private information, i.e. the extent to which a player knows the future
private component of her preferences. The independent agent and single agent models are special
cases, where ρ=0 and ρ=1, respectively. The model also allows 0 < ρ < 1, a class of games which
have not yet been considered. We apply the model to crisis bargaining and demonstrate how to
estimate ρ, as well as parameters associated with utilities.
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