Admissibility and event-rationality
Barelli, Paulo and Galanis, Spyros (2013) Admissibility and event-rationality. Games and Economic Behavior, 77, (1), 21-40. (doi:10.1016/j.geb.2012.08.012).
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We develop an approach to providing epistemic conditions for admissible behavior in games. Instead of using lexicographic beliefs to capture infinitely less likely conjectures, we postulate that players use tie-breaking sets to help decide among strategies that are outcome-equivalent given their conjectures. A player is event-rational if she best responds to a conjecture and uses a list of subsets of the other playersʼ strategies to break ties among outcome-equivalent strategies. Using type spaces to capture interactive beliefs, we show that event-rationality and common belief of event-rationality (RCBER) imply S∞W, the set of admissible strategies that survive iterated elimination of dominated strategies. By strengthening standard belief to validated belief, we show that event-rationality and common validated belief of event-rationality (RCvBER) imply IA, the iterated admissible strategies. We show that in complete, continuous and compact type structures, RCBER and RCvBER are nonempty, hence providing epistemic criteria for S∞W and IA.
|Keywords:||epistemic game theory, admissibility, iterated weak dominance, common knowledge, rationality, completeness|
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Date Deposited:||14 Dec 2009|
|Last Modified:||28 Sep 2012 09:32|
|Contributors:||Barelli, Paulo (Author)
Galanis, Spyros (Author)
|Publisher:||University of Southampton|
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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