SELF-FULFILLING MECHANISMS IN BAYESIAN GAMES

A mechanism for a Bayesian game G is a mapping Ct. from the set of sta tes of nature to the set of players' actions. mu is self-fulfilling if players are truthful at the communication stage and, given the inform ation revealed by mu, no player can gain in unilaterally deviating fro m the action prescribed by the mechanism. We investigate the propertie s of self-fullilling mechanisms and we show in particular that they co rrespond to inert solutions of the infinitely repeated game generated by G. We also discuss applications to market games, regulation, and R& D games. Journal of Economic Literature Classification Numbers: D82, C 72. (C) 1998 Academic Press.