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Delegation and ambiguity in correlated equilibrium

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  • Grant, Simon
  • Stauber, Ronald

Abstract

In the context of normal-form games with complete information, we introduce a notion of correlated equilibrium that allows partial delegation to a mediator and ambiguity in the correlation device. Without ambiguity, the sets of equilibrium action distributions are equivalent to those for coarse correlated equilibrium (Moulin and Vial, 1978). With correlation devices that incorporate ambiguity, any action distribution that Pareto dominates a coarse correlated equilibrium or a correlated equilibrium (Aumann, 1974), can be approximated with an arbitrary degree of precision using the proposed equilibrium notion. These approximations are attained in one-shot, static strategic interactions, and do not require repeated play. We also analyze such equilibria when the set of feasible posteriors is exogenously constrained, which yields, as a special case, a definition and characterization of an “ambiguous correlated equilibrium” that does not require delegation to the mediator.

Suggested Citation

  • Grant, Simon & Stauber, Ronald, 2022. "Delegation and ambiguity in correlated equilibrium," Games and Economic Behavior, Elsevier, vol. 132(C), pages 487-509.
    • Handle: RePEc:eee:gamebe:v:132:y:2022:i:c:p:487-509
    DOI: 10.1016/j.geb.2022.01.023
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    More about this item

    Keywords

    Correlated equilibrium; Coarse correlated equilibrium; Ambiguity; Maxmin;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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