Answer to Question #288227 in Microeconomics for Likenaw

Question

Sealed-bid auction and cournot game involves a new comer firm (2) and incumbent firm

operated for a year are can be an example of a game with incomplete information. Explain

using practical examples how each of these games can be games with incomplete

information?

Answer 1

Informally, a game of incomplete information is a game where the players do not have common knowledge of the game being played. This idea is tremendously important in capturing many economic situations, where a variety of features of the environment may not be commonly known.