Example Consider the following \"game of incomplete information\": 2 Firms (A,B) set prices (1,4 or 6) Firm A has zero marginal costs, Firm B's marginal costs are unknown: Either l or 4 Firm B learns Firm B's cost-type before making a decision, Firm A does not Consumers buy from the cheapest firm, and from firm A if there are ties Market demand 8 p Profits Revenue - COStS - pq-cq=(p-C)q Modelling strategy: introduce a distribution over types (type combinations)