How common are common priors?

Ziv Hellman, Dov Samet

Research output: Contribution to journalArticlepeer-review

Abstract

To answer the question in the title we vary agents' beliefs against the background of a fixed knowledge space, that is, a state space with a partition for each agent. Beliefs are the posterior probabilities of agents, which we call type profiles. We then ask what is the topological size of the set of consistent type profiles, those that are derived from a common prior (or a common improper prior in the case of an infinite state space). The answer depends on what we term the tightness of the partition profile. A partition profile is tight if in some state it is common knowledge that any increase of any single agent's knowledge results in an increase in common knowledge. We show that for partition profiles that are tight the set of consistent type profiles is topologically large, while for partition profiles that are not tight this set is topologically small.

Original languageEnglish
Pages (from-to)517-525
Number of pages9
JournalGames and Economic Behavior
Volume74
Issue number2
DOIs
StatePublished - Mar 2012
Externally publishedYes

Keywords

  • Belief
  • Common knowledge
  • Common prior
  • Knowledge

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'How common are common priors?'. Together they form a unique fingerprint.

Cite this