Epistemic Game Theory: Beliefs and Types

Abstract

Modelling what each agent believes about her opponents, what she believes her opponents believe about her, and so on, plays a prominent role in game theory and its applications. This article describes Harsanyi's formalism of type spaces, which provides a simple, elegant representation of probabilistic belief hierarchies. A special emphasis is placed on the construction of rich type spaces, which can generate all 'reasonable' belief hierarchies in a given game. Recent developments, employing richer representation of beliefs, are also considered.