COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 884R

"Correlated Equilibrium with Generalized Information Structures"

Adam Brandenburger and Eddie Dekel and John Geanakoplos

August 1988
Revised August 1989

We study the "generalized correlated equilibria" of a game when players make information processing errors. It is shown that the assumption of information processing errors is equivalent to that of "subjectivity" (i.e., differences between the players’ priors). Hence a bounded rationality justification of subjective priors is provided. We also describe the set of distributions on actions induced by generalized correlated equilibria with common priors.

JE Classification: 026, 022

Keywords: Correlated equilibria, subjective priors, bounded rationality