Extremal Choice Equilibrium: Existence and Purification with Infinite-Dimensional Externalities
We prove existence and purification results for equilibria in which players choose extreme points of their feasible actions in a class of strategic environments exhibiting a product structure. We assume finite-dimensional action sets and allow for infinite-dimensional externalities. Applied to large games, we obtain existence of Nash equilibrium in pure strategies while allowing a continuum of groups and general dependence of payoffs on average actions across groups, without resorting to saturated measure spaces. Applied to games of incomplete information, we obtain a new purification result for Bayes-Nash equilibria that permits substantial correlation across types, without assuming conditional independence given the realization of a finite environmental state. We highlight our results in examples of industrial organization, auctions, and voting.
Year of publication: |
2011-10
|
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Authors: | Barelli, Paulo ; Duggan, John |
Institutions: | University of Rochester - Center for Economic Research (RCER) |
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