 Robust refinement of rationalizability with arbitrary payoff uncertaintyYi-Chun Chen, Satoru Takahashi and Siyang Xiong Games and Economic Behavior, 2022, vol. 136, issue C, 485-504 Abstract: Following Fudenberg et al. (1988) and Dekel and Fudenberg (1990), we say that a refinement of (interim correlated) rationalizability is robust if it is prescribed by a solution correspondence that is upper hemicontinuous with respect to perturbations of higher-order beliefs. We characterize robust refinements of rationalizability subject to arbitrary common knowledge restrictions on payoffs. We demonstrate how the characterization pins down a novel family of robust refinements of rationalizability in arbitrary finite games as well as in specific economic examples such as first-price auctions and the Cournot competition. We also apply our characterization to study the critique raised by Weinstein and Yildiz (2007b) to the global-game equilibrium refinement approach. In terms of the model primitives, we provide a necessary and sufficient condition under which the Weinstein-Yildiz critique remains valid. Keywords: Refinement; Rationalizability; Upper hemicontinuity; Structure theorem; Generic uniqueness; Universal type space (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:136:y:2022:i:c:p:485-504 DOI: 10.1016/j.geb.2022.10.009 Access Statistics for this article Games and Economic Behavior is currently edited by E. Kalai More articles in Games and Economic Behavior from Elsevier |
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