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Causal discourse in a game of incomplete information

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  • White, Halbert
  • Xu, Haiqing
  • Chalak, Karim

Abstract

Notions of cause and effect are fundamental to economic explanation. Although concepts such as price effects are intuitive, rigorous foundations justifying causal discourse in the wide range of economic settings remain lacking. We illustrate this deficiency using an N-bidder private-value auction, posing causal questions that cannot be addressed within existing frameworks. We extend the frameworks of Pearl (2000) and White and Chalak (2009) to introduce topological settable systems (TSS), a causal framework capable of delivering the missing answers. Particularly, TSS accommodate choices belonging to general function spaces. Our analysis suggests how TSS enable causal discourse in various areas of economics.

Suggested Citation

  • White, Halbert & Xu, Haiqing & Chalak, Karim, 2014. "Causal discourse in a game of incomplete information," Journal of Econometrics, Elsevier, vol. 182(1), pages 45-58.
    • Handle: RePEc:eee:econom:v:182:y:2014:i:1:p:45-58
    DOI: 10.1016/j.jeconom.2014.04.007
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    Cited by:

    1. Nianqing Liu & Quang Vuong & Haiqing Xu, 2012. "Rationalization and Identification of Discrete Games with Correlated Types," Department of Economics Working Papers 130915, The University of Texas at Austin, Department of Economics.
    2. Liu, Nianqing & Vuong, Quang & Xu, Haiqing, 2017. "Rationalization and identification of binary games with correlated types," Journal of Econometrics, Elsevier, vol. 201(2), pages 249-268.

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    More about this item

    Keywords

    Auction; Causality; Game of incomplete information; Simultaneous equations; Structural equations;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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