Dempster-Shafer Equilibrium and Unambiguous Types

This paper explores the impact of the assumption of unambiguous types on the Dempster-Shafer equilibrium introduced by Eichberger and Kelsey (2004). It is shown that if the types of the Sender are perceived unambiguous, then the Receiver’s conditional Choquet preference derived by the DempsterShafer updating rule is expected utility, regardless of whether the observed massage is ambiguous or not. This property of the updating rule narrows down the equilibrium behavior of the pooling but not separating DempsterShafer equilibrium to the same behavior of perfect Bayesian equilibrium. Moreover, if one relaxes the assumption of unambiguous types but maintains the belief persistence axiom of Ryan (2002a), then any separating DempsterShafer equilibrium is behaviorally equivalent to perfect Bayesian equilibrium.