Working Paper BETA #2001-14

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Title : Persuasion Games with Higher Order Uncertainty

Author(s) : Frédéric KOESSLER

Abstract : In persuasion games, it is well known that a perfectly revealing equilibrium may fail to exist when the decision maker is uncertain about the interested party's payoff-relevant information. However, by explicitly integrating higher order uncertainty into the information structure, this paper shows that a perfectly revealing equilibrium does exist when disclosures are not restrained to intervals of the payoff-relevant state space. On the contrary, when payoff-irrelevant disclosures are impossible, a perfectly revealing equilibrium fails to exist as long as there is a strictly positive probability that the decision maker does not know whether the interested party is informed or not. In this case, a partially revealing equilibrium and associated inferences are characterized.

Key-words : Strategic information revelation; Persuasion games; Higher order uncertainty; Provability

JEL Classification : C72; D82