Reference no: EM131332501
Repeat given Exercise, using the following Aumann model of incomplete information with beliefs:
N = {I, II},
Y = {1, 2, 3, 4, 5},
FI = {{1, 2}, {3, 4}, {5}},
FII = {{1, 3, 5}, {2}, {4}}
P(ω) = 1/5, ∀ω ∈ Y.
for A = {1,4} and ω* = 3.
Exercise
Consider an Aumann model of incomplete information with beliefs in which
N = {I, II},
Y = {1, 2, 3, 4, 5, 6, 7, 8, 9},
FI = {{1, 2, 3}, {4, 5, 6}, {7, 8, 9}},
FII = {{1, 2, 3, 4}, {5, 6, 7, 8}, {9}}
P(ω) = 1/9, ∀ω ∈ Y.
Let A = {1, 5, 9}, and suppose that the true state of the world is ω∗ = 9. Answer the following questions:
(a) What is the probability that Player I (given his information) describes to the event A?
(b) What is the probability that Player II ascribes to the event A?
(c) Suppose that Player I announces the probability you calculated in item (a) above. How will that affect the probability that Player II now ascribes to the event A?
(d) Suppose that Player II announces the probability you calculated in item (c). How will that affect the probability that Player I ascribes to the event A, after hearing Player II's announcement?
(e) Repeat the previous two questions, with each player updating his conditional probability following the announcement of the other player. What is the sequence of conditional probabilities the players calculate? Does the sequence converge, or oscillate periodically (or neither)?
(f) Repeat the above, with ω∗ = 8.
(g) Repeat the above, with ω∗ = 6.
(h) Repeat the above, with ω∗ = 4.
(i) Repeat the above, with ω∗ = 1.
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