Definition:
We now want to define an equilibrium concept for static Bayesian games. To do so, we must first define the players' strategy spaces in such a game. Given the timing of a static Bayesian game, in which nature begins the game by drawing the players' types, a (pure) strategy for player i must specifL a feasible action for each of player i's possible types.
Definition: In the static Bayesian game
, a strategy for player i is a function s,(t,), where for each type t, in T,, s,(t,) specifies the action form the feasible set A, that type t, would choose if drawn by nature.
Definition: In a separating strategy each type ti in Ti chooses a different action a, from Ai.
Definition: In a pooling strategy all types choose the same action.
Definition: In the static Bayesian game
, the strategies
are (pure strategyj Bayesian Nash equilibrium if for each player i and for each of i's types t, in Ti, s*i(ti) solves
That is, no player wants to change her strategy, even if thi change involves only one action by one type.
It can be shown that in a finite static Bayesian game there exists a Bayesian Nash equilibrium, perhaps in mixed strategies.