Correlated equilibria and communication in games.

Summary The correlated equilibrium is a game theoretic solution concept. It was proposed by Aumann (1974, 1987) in order to capture the strategic correlation opportunities that the players face when they take into account the extraneous environment in which they interact. The notion is illustrated in Section II. A formal definition is given in Section III. The correlated equilibrium also appears as the appropriate solution concept if preplay communication is allowed between the players. As shown in Section IV, this property can be given several precise statements according to the constraints imposed on the players communication, which can go from plain conversation to exchange of messages through noisy channels. Originally designed for static games with complete information, the correlated equilibrium applies to any strategic form game. It is geometrically and computationally more tractable than the better known Nash equilibrium. The solution concept has been extended to dynamic games, possibly with incomplete information. As an illustration, we define in details the communication equilibrium for Bayesian games in Section V.