A systematic procedure for nding Perfect Bayesian Equilibria in Incomplete Information Games
نویسنده
چکیده
This paper provides a non-technical introduction to a procedure to nd Perfect Bayesian equilibria (PBEs) in incomplete information games. Despite the rapidly expanding literature on industrial organization that uses PBE as its main solution concept, most undergraduate and graduate textbooks still present a relatively theoretical introduction to PBEs. This paper o¤ers a systematic ve-step procedure that helps students nd all pure-strategy PBEs in incomplete information games. Furthermore, it illustrates a step-by-step application of this procedure to a signaling game, using a worked-out example.
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