COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Post Office Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 884R

"Correlated Equilibrium with Generalized Information Structures"

John Geanakoplos, Adam Brandenburger and Eddie Dekel

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