Perfect Bayesian Equilibrium (PBE) is a refinement of Bayesian Nash Equilibrium in the context of dynamic games with incomplete information. It incorporates the concepts of beliefs and sequential rationality to provide a detailed analysis of players' strategies and their updates based on observed actions. The key elements of Perfect Bayesian Equilibrium include: 1. **Beliefs**: Players have beliefs about the types of other players (i.e., their private information) based on prior probabilities.
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