This chapter presents the concept of a Bayesian Nash equilibrium as defined by Harsanyi (1967). His approach was to transform a game of incomplete information into one of imperfect information; any buyer who has incomplete information about other buyers’ values is treated as if he were uncertain about their types. A brief introduction to auctions is provided, and how these can be viewed as games of incomplete information is explained. The notations that will be used throughout the book are defined.
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