Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/253514 
Authors: 
Year of Publication: 
2022
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 17 [Issue:] 1 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2022 [Pages:] 461-506
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
The paper provides theoretical foundations for models of strategic interdependence under uncertainty that have a continuum of agents and a decomposition of uncertainty into a macro component and an agent-specific micro component, with a law of large numbers for the latter. This macro-micro decomposition of uncertainty is implied by a condition of exchangeability of agents' types, which holds at the level of the prior if and only if it also holds at the level of agents' beliefs, i.e., posteriors. Under an additional condition of anonymity in payoffs, agents' behaviors are fully determined by their beliefs about the cross-section distribution of types and other macro variables, and by their beliefs about the cross-section distribution of other agents' strategies. Any probability distribution over cross-section distributions of types and other macro variables is compatible with a fully specified belief system, but not every function from types to such probability distributions is compatible with a common prior. The paper gives necessary and sufficient conditions for compatibility of such a function with a common prior.
Subjects: 
Incomplete-information games
large populations
belief functions
common priors
exchangeability
conditional independence
conditional exact law of large numbers
JEL: 
C70
D82
D83
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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