Research
Publications
Dynamic Consistency in Incomplete Information Games with Multiple Priors (Games and Economic Behavior, 2022)
working paper | online appendix
This paper explores multi-stage incomplete information games with common ambiguous information about states or types and ambiguity averse players. We characterize a belief formation process that allows players to take their knowledge about the structure of the game into account. This process leads to subjective rectangular ex-ante belief sets for all players. We show that given these sets of beliefs, players behave dynamically consistent. Therefore, using our belief formation process, we can extend the concept of sequential equilibria to multi-stage ambiguous incomplete information games. Furthermore, we characterize assumption under which sequential rationality implies rectangularity.
Working papers and work in progress
Dynamic Consistency and Ambiguous Communication
R&R Journal of Economic Theory
(Former title: Dynamic Consistency in Ambiguous Persuasion)
In most models of ambiguous communication, a Sender can only benefit from ambiguous language if the Receiver behaves dynamically inconsistently. A dynamically inconsistent Receiver might not follow his ex-ante optimal plan after observing an ambiguous message. This paper proposes a novel approach to analyze ambiguous communication by studying dynamically consistent behavior in games with ambiguous strategies. I show that gains from ambiguous communication can be maintained even if players behave dynamically consistently. To achieve this, I define rectangularity, a condition on beliefs that ensures dynamically consistent behavior, for settings where ambiguity arises due to ambiguous strategies. Then, I analyze a Perfect Bayesian Equilibrium in an ambiguous persuasion setting. In this equilibrium, ambiguous communication outperforms standard Bayesian communication even if the Receiver behaves dynamically consistently. Finally, I extend my analysis to settings with ambiguous communication in cheap talk and mechanism design.
You can find the slides of my presentation at the 6th World Congress of the Game Theory Society here.
Dynamic Consistency in Ambiguous Dutch Auctions
We study a decreasing price auction with an ambiguity-neutral seller and two ambiguity-averse buyers. Due to the dynamic structure, buyers learn about the valuation of the opponent buyer during the auction. We characterize a belief formation process that allows buyers to consider their knowledge of the information structure. This process leads to a rectangular ex-ante belief set and implies dynamically consistent behavior. Then, we show that the seller can extract almost all surplus even if buyers behave dynamically consistently. Further, in our setting, buyers accept higher prices compared to a consistent planning approach
Feedback Design in Strategic-Form Games with Ambiguity Averse Players (with Frédéric Koessler)
We use a notion of maxmin self-confirming equilibrium (MSCE) to study optimal design of players’ feedbacks about others’ behavior in games with ambiguity averse players. Coarse feedbacks shape strategic uncertainty, and can therefore affect players’ optimal strategies and modify equilibrium behavior in an advantageous way. We characterize MSCE and study the equilibrium implications of coarse feedbacks in various classes of games and economic applications. We show how feedbacks should be optimally designed to improve cooperation in public good games with strategic substitutes, strategic complements, or more general forms of s-shaped production functions. We also study games with negative externalities and strategic substitutes such as Cournot oligopolies, and a class of Tullock contests. In general, perfect and no feedbacks are suboptimal. Some results are extended to games in which players have α-maxmin preferences.
Knightian Equilibria in Activism Games (with Dominik Karos)