Economics Seminars: Jeff Kline (Queensland University)
Jeff Kline (Queensland University)
1B6 Seminar Room, Priory Road Complex
Title: Perfecting Correlated Equilibrium with Mediator Mistakes
Abstract: We introduce a concept of correlated perfect equilibrium that uses mistakes by the mediator to induce utility maximization off the equilibrium path. The concept is show to be a simple generalization of Selten's (1975) trembling hand perfection. It is compared to the acceptable equilibrium concept of Myerson (1986) and to perfect correlated equilibrium of Dhillon and Mertens (1996). The concept allows more correlation in the mistakes than either of those alternatives, since mistakes come from a mediator and can be interpreted as a noisy channel that affects several players in the same way.