When Information Is Asymmetric
Just now I raised the idea that both players might be in a fog regarding what the other’s payoffs are and, even worse, the nature of the interaction in general. But what if it’s just one player who is in the dark? Many games of incomplete information in the real world are one-sided.
Think about wandering down any tourist-traveled street in a major city—for example, Broadway in New York. You might see some dubious people hawking “Rolex” watches. We are all aware that these timepieces, which can be purchased for impossibly low prices, are counterfeits.
But there are numerous other counterfeit or faulty products that less dubious people try to pass off as genuine or in good condition. I only need to type “used car ...