Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
957164 | Journal of Economic Theory | 2011 | 27 Pages |
This paper introduces a notion of robustness to ambiguous beliefs for Bayesian Nash equilibria. An equilibrium is robust if the corresponding strategies remain approximately optimal for a class of games with ambiguous beliefs that results from an appropriately defined perturbation of the belief structure of the original non-ambiguous belief game. The robustness definition is based on a novel definition of equilibrium for games with ambiguous beliefs that requires equilibrium strategies to be approximate best responses for all measures that define a player's belief. Conditions are derived under which robustness is characterized by a newly defined strategic continuity property, which can be verified without reference to perturbations and corresponding ambiguous belief games.