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on Microeconomics |
| By: | Jon Eguia; Tai-Wei Hu |
| Abstract: | We present a theory of endogenous policy preferences and political beliefs with boundedly rational agents who find it costly to process detailed information. Agents are otherwise fully rational, and they strategically choose how to process information. Their optimal solution is to update coarsely, ignoring less informative signals, and lumping together different histories into a single informational state. We consider an environment with a common prior, in which all agents prefer a moderate policy over extreme alternatives to the left or the right under this prior, and with common signals that would allow Bayesian-updating agents to asymptotically learn the state of Nature and to agree on the policy that is best for everyone. In this environment, we find sufficient conditions under which a majority of agents eventually become extreme and the population becomes polarized: some agents support the left policy, and some support the right policy. |
| Date: | 2026–01–30 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:26/826 |
| By: | Dirk Bergemann (Yale University); Alessandro Bonatti (MIT Sloan); Alex Smolin (Toulouse School of Economics) |
| Abstract: | We develop a framework for the optimal pricing and product design of LLMs in which a provider sells menus of token budgets to users who differ in their valuations across a continuum of tasks. Under a homogeneous production technology, we show that users' high-dimensional type profiles are summarized by a scalar index, reducing the seller's problem to one-dimensional screening. The optimal mechanism takes the form of committed-spend contracts: buyers pay for a budget that they allocate across token classes priced at marginal cost. We extend the analysis to environments with multiple differentiated models and to competition between a proprietary leader and an open-source fringe, showing that competitive pressure reshapes both the intensive and extensive margins of compute provision. Each element of our theory (token-budget menus, maximum- and minimum-spend plans, multi-model versioning, and linear API pricing) has a direct counterpart in the observed pricing practices of providers such as Anthropic, OpenAI, and GitHub. |
| Date: | 2026–03–07 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2502 |
| By: | d’Aspremont, Claude (Université catholique de Louvain, LIDAM/CORE, Belgium); Crémer, Jacques (Toulouse School of Economics) |
| Abstract: | The theory of Bayesian mechanism design is of interest to economists andcomputer scientists alike. It has focused on two extreme assumptions on the beliefs of the agents, full-freeness (or independence) and no-freeness (or Beliefs Determine Preferences). We discuss more general conditions that cover intermediate cases between these two extremes and characterize the corresponding set of implementable mechanisms. We also discuss applications of these results to economics and to computer science. |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2025002 |
| By: | Andrew Rhodes (Toulouse School of Economics); Jidong Zhou (Yale University); Junjie Zhou (Tsinghua University) |
| Abstract: | This paper develops a framework in which a multiproduct ecosystem competes with multiple single-product firms in both price and innovation. The ecosystem can use data from one product to improve the quality of its other products. We use the framework to study three regulatory policies aimed at leveling the playing field. Restricting the ecosystem's cross-product data usage, or forcing it to share data with single-product firms, benefits those firms and induces them to innovate more. However, these policies also dampen the ecosystem's incentive to collect data and innovate, potentially raising prices. Consumers are better off only when single-product firms are sufficiently good at innovating. Facilitating data exchange between single-product firms via a data cooperative can backfire and harm them, because it induces the ecosystem to price more aggressively. For both the data-sharing and data-cooperative policies, there exist data-compensation schemes such that consumers are better off compared to no regulation. |
| Date: | 2026–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2426r1 |
| By: | Kfir Eliaz; Ran Spiegler |
| Abstract: | We propose a model of whataboutism -- a rhetorical strategy that deflects criticism by citing similar misconduct that goes uncriticized on the critic's side -- and study its implications for social norms governing offensive speech. In an infinite-horizon psychological game with two rival camps, agents weigh the intrinsic benefit of offensive speech against the risk of condemnation. External criticism can be deflected via an equilibrium-based whataboutism rebuttal. We characterize the unique dynamically stable Psychological Subgame Perfect Equilibrium and show that the availability of whataboutism exacerbates offensive speech, to the extent that civility norms can break down entirely, especially in polarized societies. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.08098 |
| By: | Uzi Segal (Boston College); Zhuzhu Zhou (Xiamen University) |
| Abstract: | In a social choice setting, individuals may be unwilling to aggregate their preferences with what they regard as wrong preferences held by others because they lead to outcomes that harm themselves, harm others, are socially inefficient, or are morally unacceptable. People may still be willing to compromise with those who believe that although such preferences are wrong, society should nonetheless accept them. We offer two methods of two-level aggre- gation for such situations. In the first method, each member of society first aggregates the “corrected” individual preferences, and society then aggregates these aggregated views. In the second method, for each person, society first aggregates everyone’s views about that person’s preferences, and then aggregates the resulting individual “corrected” preferences. If these two methods yield the same social ranking, then the aggregation rule must be the sum of functions of the corrected utilities. |
| Keywords: | Social welfare function; aggregation rule; spurious unanimity |
| JEL: | D70 D30 D60 |
| Date: | 2026–03–16 |
| URL: | https://d.repec.org/n?u=RePEc:boc:bocoec:1108 |
| By: | Zhiming Feng; Qingmin Liu |
| Abstract: | This paper studies mechanism design environments in which the designer does not know the distribution of agents' private information a priori and instead learns from agents' behavior induced by the mechanism itself. We formalize a notion of self-confirming mechanisms and a refinement thereof, capturing the idea that an equilibrium mechanism is optimal given the designer's belief and that this belief is consistent with the information produced by the mechanism. We establish a fictitious revelation principle, showing that any incentive-compatible mechanism can be represented as a direct mechanism with filtered type reports that preserve the original mechanism's informational content. Applying the framework to a monopoly problem, we show that, subject to an equilibrium refinement, dominant-strategy self-confirming mechanisms are exactly posted-price mechanisms with locally revenue-maximizing prices. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.12532 |
| By: | Sergei Kichko; Marco A. Marini; Riccardo D. Saulle; Jacques-François Thisse |
| Abstract: | This paper extends the CES model of monopolistic competition to the case where varieties are both horizontally and vertically differentiated. A distinctive feature of our model is the presence of a network externality, which operates through the number of varieties available at each quality level. Depending on the quality gap, there are corner equilibria in which consumers purchase only high-quality or low-quality varieties, or an interior equilibrium in which consumers are split between the two qualities. Unlike the CES model of monopolistic competition, the equilibrium is never efficient and the market may even select the outcome with the lowest surplus. |
| Keywords: | monopolistic competition, vertical differentiation, horizontal differentiation |
| JEL: | D42 D43 L1 L12 L13 L41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12554 |
| By: | Yingkai Li; Xiaoyun Qiu |
| Abstract: | We study how to allocate resources to participants who can strategically misrepresent their deservingness at a cost. A principal assigns item(s) (or money) among multiple agents on the basis of their costly signals. Each agent's signal reflects their private type in the absence of misrepresentation but can be inflated above their true type at a cost. The principal is a social planner who aims to maximize the weighted average of matching efficiency and a utilitarian objective. Strategic misrepresentation introduces novel incentive-compatibility constraints, under which we characterize the optimal mechanism. We apply our characterization to two kinds of markets, distinguished by resource scarcity, and show that the principal strictly benefits from randomizing the allocations based on costly signals when the population of participants is large enough. Interestingly, in large markets with scarce resources, the format of the optimal mechanism converges to a winner-takes-all contest; however, there is a non-diminishing value in randomizing allocations to middle types as the population of participants grows. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.04173 |
| By: | Sayantan Ghosal; Łukasz Woźny |
| Abstract: | Although a Condorcet winner commands a majority in its favor, there is no guarantee of unanimity. In a Lindahl equilibrium, a suitably chosen system of personalized transfers and prices ensures unanimity, but there is no guarantee of a majority vote in its favor. Do Lindahl equilibria decentralize Condorcet winners? In a setting where voters' preferences are satiated, characterized by bliss points, this paper proposes a new balancedness condition which is satisfied when a Condorcet winner lies within the interior of the convex hull of voters' bliss points. We show that such a political compromise between the most preferred policies of different voter types can be decentralized as Lindahl equilibria. |
| Keywords: | Bliss points, Condorcet winner, Lindhal equilibria, balancedness |
| JEL: | D50 D61 D71 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2024101 |
| By: | Ohnishi, Kazuhiro |
| Abstract: | This paper considers a multi-stage game model with two partially cooperating firms whose objective functions include maximizing not only their own profits but also a portion of their rivals’ profits. In the first stage, each firm independently and simultaneously decides whether to incorporate consumer surplus into its objective function. In the second stage, any firm that chooses to do so selects its level of consumer orientation. In the third stage, after observing the rival’s choices in the first and second stages, each firm independently and simultaneously chooses its output level. The paper characterizes the equilibrium of this model. |
| Keywords: | Consumer surplus; Corporate social responsibility; Cournot duopoly model; Partially cooperating firms |
| JEL: | D21 L13 L20 |
| Date: | 2026–01–18 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127764 |
| By: | Marilyn Pease; Mark Whitmeyer |
| Abstract: | We provide a unifying way to analyze how risk aversion changes bidding in auctions by asking which bids become more attractive as bidders become more risk averse. In first-price auctions, under two payoff conditions--winning is never worse than the outside option, and winning with a low bid is preferable to winning only with a high bid--greater risk aversion makes high bids more appealing. In second-price auctions with a known outside option, bidding more increases risk exposure conditional on winning, so greater risk aversion favors lower bids. We show these bid-level forces translate into corresponding equilibrium comparative statics. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.09683 |
| By: | Bahar Ta\c{s}kesen |
| Abstract: | Generative AI has transformed the economics of information production, making explanations, proofs, examples, and analyses available at very low cost. Yet the value of information still depends on whether downstream users can absorb and act on it. A signal conveys meaning only to a learner with the structural capacity to decode it: an explanation that clarifies a concept for one user may be indistinguishable from noise to another who lacks the relevant prerequisites. This paper develops a mathematical model of that learner-side bottleneck. We model the learner as a mind, an abstract learning system characterized by a prerequisite structure over concepts. A mind may represent a human learner, an artificial learner such as a neural network, or any agent whose ability to interpret signals depends on previously acquired concepts. Teaching is modeled as sequential communication with a latent target. Because instructional signals are usable only when the learner has acquired the prerequisites needed to parse them, the effective communication channel depends on the learner's current state of knowledge and becomes more informative as learning progresses. The model yields two limits on the speed of learning and adoption: a structural limit determined by prerequisite reachability and an epistemic limit determined by uncertainty about the target. The framework implies threshold effects in training and capability acquisition. When the teaching horizon lies below the prerequisite depth of the target, additional instruction cannot produce successful completion of teaching; once that depth is reached, completion becomes feasible. Across heterogeneous learners, a common broadcast curriculum can be slower than personalized instruction by a factor linear in the number of learner types. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.19349 |
| By: | Lingxiao Huang (Nanjing University); Wenyang Xiao (Nanjing University); Nisheeth K. Vishnoi (Yale University) |
| Abstract: | As AI systems enter institutional workflows, workers must decide whether to delegate task execution to AI and how much effort to invest in verifying AI outputs, while institutions evaluate workers using outcome-based standards that may misalign with workers' private costs. We model delegation and verification as the solution to a rational worker's optimization problem, and define worker quality by evaluating an institution-centered utility (distinct from the worker's objective) at the resulting optimal action. We formally characterize optimal worker workflows and show that AI induces phase transitions, where arbitrarily small differences in verification ability lead to sharply different behaviors. As a result, AI can amplify workers with strong verification reliability while degrading institutional worker quality for others who rationally over-delegate and reduce oversight, even when baseline task success improves and no behavioral biases are present. These results identify a structural mechanism by which AI reshapes institutional worker quality and amplifies quality disparities between workers with different verification reliability. |
| Date: | 2026–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2500 |
| By: | Martin Castillo-Quintana; Gianfranco Miranda-Romero |
| Abstract: | The war of attrition with two-sided asymmetric information is a foundational model in political economy, yet it generically admits a continuum of perfect Bayesian equilibria. This paper characterizes the sources of equilibrium multiplicity. We identify conditions on the type distribution that determine which form of multiplicity arises: when the lower limit of the hazard potential -- the integral of the hazard rate normalized by type -- diverges, the free parameter is the relative aggressiveness of strategies; when that limit is finite, the free parameter is the mass of types conceding immediately. We prove that the Amann-Leininger payoff perturbation and the introduction of behavioral types -- two seemingly distinct refinements -- are mathematically equivalent and succeed in selecting a unique equilibrium if and only if the type support is bounded. For unbounded supports, multiplicity persists. These results provide guidance for applied theorists: choosing distributions with bounded support ensures existing refinements deliver unique predictions. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.13634 |
| By: | Michalis Deligiannis; Marco Scarsini; Xavier Venel |
| Abstract: | We study a finite-horizon dynamic wholesale-price contract between a manufacturer and a retailer, both of whom observe only sales, rather than the true demand. When the retailer stocks out, unmet demand is unobserved, so both parties update a common posterior over the demand distribution from sales data. Each period, the manufacturer sets the wholesale price, the retailer chooses an order quantity, and the public belief state is updated. We characterize Markov perfect equilibria as functions of this public belief. Our main results are as follows: for Weibull demand, we extend the well-known scaling approach to this strategic learning setting, prove the existence of an equilibrium, and reduce computation to a standardized one-parameter recursion; for exponential demand, we show that the equilibrium is unique and computable via a simple backward recursion. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.13599 |
| By: | Shengyu Cao; Ming Hu |
| Abstract: | E-commerce is shifting from search-based shopping to agentic purchasing. Rather than relying on keywords, AI shopping agents learn customer preferences through targeted multi-round conversations and then recommend a tailored set of products. We develop a solicit-then-suggest framework to study this setting. In a d-dimensional preference space, an agent conducts m rounds of solicitation to refine its belief about the customer's ideal product, then recommends k products from which the customer chooses. Our analysis identifies the key economic tradeoff. Under a Gaussian prior, we establish an uncertainty decomposition: solicitation depth and assortment breadth are substitutes, with total prior uncertainty split between what solicitation resolves and what assortment breadth hedges. The two instruments improve match quality at very different rates. Expected loss decreases on the order of 1/m with solicitation depth, but only on the order of k^(-2/d) with assortment breadth, reflecting a curse of dimensionality. Thus, a few well-designed questions can achieve what would otherwise require far more recommendations. We also characterize the optimal policy. The optimal assortment forms a Voronoi partition, assigning each product to the posterior region it best serves. With a single recommended product, the optimal solicitation follows a water-filling rule that equalizes posterior uncertainty across dimensions. With multiple products, the optimum may allocate less precision to dimensions that the assortment can hedge. This single-product water-filling rule also yields a general approximation guarantee for larger assortments, and the gap vanishes as dimension grows. Beyond the Gaussian case, the uncertainty decomposition and substitutability between solicitation depth and assortment breadth continue to hold for non-Gaussian priors. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.20972 |
| By: | Marek Dietl; Łukasz Skrok; Bartłomiej Wiśnicki |
| Abstract: | We employ a duopoly model with horizontal differentiation of a product to analyse impact of imperfect patent rights in the form of a patent thicket on market entry and outcomes in a market when a single unit of a good is to be provided, reflecting a competition of two potential suppliers within a tender procedure of a complex product. We show that even under price competition, a treat of litigation coming from the overlap in the patent protection leads to pricing decisions above marginal costs level. Such a situation, on the one hand, is socially costly due to costs linked to fixed costs of market entry of both competitors, but on the other hand, it is not necessarily the most beneficial from the point of view of a buyer. The paper resolves Bertrand paradox in a novel way. |
| Keywords: | patent thickets, horizontal differentiation, Bertrand paradox |
| JEL: | D23 K11 L13 O34 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2025112 |
| By: | Julia Müller; Thorsten Upmann |
| Abstract: | This paper develops a dynamic model in which the productivity of joint research governs strategic investment timing in innovation races. Departing from the standard assumption that discovery rates scale proportionally with the number of active firms, we allow research to exhibit decreasing or increasing returns, thereby endogenizing the aggressiveness of innovation competition. We show that returns to joint research determine whether innovation races exhibit preemption or coordination. When research efforts are substitutes, follower entry is unattractive, generating a first-mover advantage and a preemption equilibrium. When complementarities are sufficiently strong, the gains from early investment vanish and firms invest simultaneously. The model thus identifies a regime shift in innovation races: competition accelerates investment under decreasing returns but promotes coordinated entry under increasing returns. These findings highlight the research technology as a central determinant of market dynamics and provide a unified perspective on heterogeneous patterns of innovation. |
| Keywords: | innovation races, R&D competition, strategic investment timing, preemption and coordination, research complementarities |
| JEL: | O31 D81 C73 L13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12552 |
| By: | Frank Yang (Department of Economics, Harvard University); Kai Hao Yang (School of Management, Yale University) |
| Abstract: | We study optimization problems in which a linear functional is maximized over probability measures that are dominated by a given measure according to an integral stochastic order in an arbitrary dimension. We show that the following four properties are equivalent for any such order: (i) the test function cone is closed under pointwise minimum, (ii) the value function is affine, (iii) the solution correspondence has a convex graph with decomposable extreme points, and (iv) every ordered pair of measures admits an order-preserving coupling. As corollaries, we derive the extreme and exposed point properties involving integral stochastic orders such as multidimensional mean-preserving spreads and stochastic dominance. Applying these results, we generalize Blackwell's theorem by completely characterizing the comparisons of experiments that admit two equivalent descriptions-through instrumental values and through information technologies. We also show that these results immediately yield new insights into information design, mechanism design, and decision theory. |
| Date: | 2026–03–12 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2506 |
| By: | Lucas Pahl |
| Abstract: | We present a new method for computation of the index of completely mixed equilibria in finite games, based on the work of Eisenbud et al.(1977). We apply this method to solving two questions about the relation of the index of equilibria and the index of fixed points, and the index of equilibria and payoff-robustness: any integer can be the index of an isolated completely mixed equilibrium of a finite game. In a particular class of isolated completely mixed equilibria, called monogenic, the index can be $0$, $+1$ or $-1$ only. In this class non-zero index is equivalent to payoff-robustness. We also discuss extensions of the method of computation to extensive-form games, and cases where the equilibria might be located on the boundary of the strategy set. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.04298 |
| By: | Adam Hamdan |
| Abstract: | In priority-based matching, serial dictatorship (SD) is simple, strategyproof, and Pareto efficient, but not free of justified envy (i.e. fair). This paper studies how to fairly order agents in SD as a function of their priorities. I show that if preferences are identical across agents and uniformly distributed, and objects have unit capacities, the serial order that minimizes the expected number of justified envy cases is the Kemeny ranking of agents' priorities. If any of these assumptions -- identical preferences, uniformly distributed preferences, or unit capacities -- is relaxed, the optimal SD follows a weighted Kemeny ranking. Broadly, these results demonstrate how insights from social choice theory can inform the design of practical matching mechanisms. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.05660 |
| By: | Joseph Y. Halpern; Evan Piermont; Marie-Louise Vier\o |
| Abstract: | We examine how causal beliefs affect an agent's choices and how feedback on those choices leads to updated causal beliefs. Building on the structural-equations framework for modeling causality, we first examine the general problem of updating causal beliefs in the face of novel (and possibly inexplicable) data. We model an agent who is uncertain of the true causal model, and therefore entertains a probabilistic belief over the set of possible models. We then consider how causal beliefs influence choices by building a model of agency and utility on top of the usual structural-equations framework. Using these two components, we propose a notion of steady state, where the feedback received from an agent's optimal action, given her current beliefs about the true causal model, can be rationalized by those beliefs. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.09387 |
| By: | Emanuele Borgonovo; An Chen; Massimo Marinacci; Shihao Zhu |
| Abstract: | We study continuous-time portfolio choice with nonlinear payoffs under smooth ambiguity and Bayesian learning. We develop a general framework for dynamic, non-concave asset allocation that accommodates nonlinear payoffs, broad utility classes, and flexible ambiguity attitudes. Dynamic consistency is obtained by a robust representation that recasts the ambiguity-averse problem as ambiguity-neutral with distorted priors. This structure delivers explicit trading rules by combining nonlinear filtering with the martingale approach and nests standard concave and linear-payoff benchmarks. As a leading application, delegated management with convex incentives illustrates that ambiguity aversion shifts beliefs toward adverse states, limits the range of states that would otherwise trigger more aggressive risk taking, and reduces volatility through lower risky exposure. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.08552 |
| By: | Dollinger, Jérôme (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | This paper analyses the formation of alliances and technological partnerships in contests. Alliances enhance the probability of winning at the cost of sharing the prize if won, while technological partnerships reduce the marginal cost of the effort invested in the contest by the members. When agents cannot form technological partnerships, I find that no alliance can be stable. When agents exhibit extreme free ridding behaviour at equilibrium, the stabilisation of the grand alliance by technological cooperation requires restrictive assumptions on the set of blocking agents. Nevertheless, When the agents manifest less free ridding intentions, the threat of being excluded from a global technological partnership is sufficient to ensure the stability of the grand alliance in the long run. This indicates that when the free ridding behaviours are not extreme, the ability to exclude is a sufficient condition for the global technological cooperation to annihilate competition in contests. In that context, the existence of technological partnerships facilitates the formation of alliances. |
| Keywords: | Contests ; Alliances ; Technological partnerships ; Stability |
| JEL: | C70 D72 D74 |
| Date: | 2024–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2024033 |
| By: | J\'anos Flesch; Arkadi Predtetchinski; William D Sudderth; Xavier Venel |
| Abstract: | We study infinite-horizon Markov decision processes (MDPs) where the decision maker evaluates each of her strategies by aggregating the infinite stream of expected stage-rewards. The crucial feature of our approach is that the aggregation is performed by means of a given diffuse charge (a diffuse finitely additive probability measure) on the set of stages. The results of Neyman [2023] imply that in this setting, in every MDP with finite state and action spaces, the decision maker has a pure optimal strategy as long as the diffuse charge satisfies the time value of money principle. His result raises the question of existence of an optimal strategy without additional assumptions on the aggregation charge. We answer this question in the negative with a counterexample. With a delicately constructed aggregation charge, the MDP has no optimal strategy at all, neither pure nor randomized. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.04226 |
| By: | Łukasz Balbus; Michael Greinecker; Kevin Reffett; Łukasz Woźny |
| Abstract: | We provide general theoretical foundations for modeling strategic uncertainty in large distributional Bayesian games with general type spaces, using a version of interim correlated rationalizability. We then focus on the case in which payoff functions are supermodular in actions, as is common in the literature on global games. This structure allows us to identify extremal interim correlated rationalizable solutions with extremal interim Bayes-Nash equilibria. Notably, no order structure on types is assumed. We illustrate our framework and results using the large versions of the electronic mail game and a global game. |
| Keywords: | large games, interim correlated rationalizability, global games, electronic mail game, universal type space, supermodular games, Bayes-Nash equilibrium |
| JEL: | C72 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2025113 |