Bayesian Game Theory

Bayesian Game Theory is a framework for understanding situations where players have incomplete information about each other's preferences or types. In these games, players must make decisions based on beliefs about what the other players might know or want. Instead of fixed strategies, players use probabilities to represent their beliefs and update these beliefs as they receive new information. This approach allows for more nuanced strategic interactions, where players account for uncertainty and adjust their actions accordingly, leading to different outcomes compared to traditional game theory, where full information is assumed.