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Present economic theories make a common-knowledge assumption that implies that the first or the second-order beliefs determine all higherorder beliefs. We analyze the role of such closing assumptions at finite orders by instead allowing higher orders to vary arbitrarily. Assuming that the space of underlying uncertainty is sufficiently rich, we show that… (More)

- Jonathan Weinstein, Muhamet Yildiz
- Games and Economic Behavior
- 2007

In some games, the impact of higher-order uncertainty is very large, implying that present economic theories may rely critically on the strong common knowledge assumptions they make. Focusing on normalform games in which the players’ action spaces are compact metric spaces, we show that our key condition, called “global stability under uncertainty,” implies… (More)

An agent with a misperception may have an evolutionary advantage when his misperception and its behavioral implications are recognized by others. In such situations evolutionary forces can lead to misperceptions, yielding “irrational behavior,” such as the play of strictly dominated strategies. We point out that this reasoning relies on the assumption of… (More)

We show that in any game that is continuous at infinity, if a plan of action ai is rationalizable for a type ti, then there are perturbations of ti for which following ai for an arbitrarily long future is the only rationalizable plan. One can pick the perturbation from a finite type space with common prior. Furthermore, if ai is part of a Bayesian Nash… (More)

I analyze a sequential bargainingmodel in which players are optimistic about their bargaining power (measured as the probability of making offers), but learn as they play the game. I show that there exists a uniquely predetermined settlement date, such that in equilibrium the players always reach an agreement at that date, but never reach one before it.… (More)

- Muhamet Yildiz
- 2002

In these lectures, we analyze the issues arise in a dynamics context in the presence of incomplete information, such as how agents should interpret the actions the other parties take. We define perfect Bayesian Nash equilibrium, and apply it in a sequential bargaining model with incomplete information. As in the games with complete information, now we will… (More)

Consider a group of individuals with unobservable perspectives (subjective prior beliefs) about a sequence of states. In each period, each individual receives private information about the current state and forms an opinion (a posterior belief). She also chooses a target individual and observes the target’s opinion. This choice involves a trade-off between… (More)

- Muhamet Yildiz
- 2006

For a finite set of actions and a rich set of fundamentals, consider the interim rationalizable actions on the universal type space, endowed with the usual product topology. (1) Generically, there exists a unique rationalizable action profile. (2) Every model can be approximately embedded in a dominance-solvable model. (3) For any given rationalizable… (More)

- Jonathan Weinstein, Muhamet Yildiz
- Games and Economic Behavior
- 2011

Article history: Received 14 April 2009 Available online xxxx JEL classification: C72 C73

- Boris Maciejovsky, Birger Wernerfelt, +6 authors Christian Zehnder
- 2009

Christian Zehnder, and workshop participants at MIT and Harvard are gratefully acknowledged. Of course, the usual disclaimer applies. 2 A mechanism with low direct cost of use may be preferred to alternatives implementing more efficient allocations. We show this experimentally by giving pairs of subjects the option to agree on a single average price for a… (More)