Belief in the opponentsʼ future rationality

Andrés Perea

Games and Economic Behavior, 2014, vol. 83, issue C, 231-254

Abstract: For dynamic games we consider the idea that a player, at every stage of the game, will always believe that his opponents will choose rationally in the future. This is the basis for the concept of common belief in future rationality, which we formalize within an epistemic model. We present an iterative procedure, backward dominance, that proceeds by eliminating strategies from the game, based on strict dominance arguments. We show that the backward dominance procedure selects precisely those strategies that can rationally be chosen under common belief in future rationality if we would not impose (common belief in) Bayesian updating.

Keywords: Epistemic game theory; Dynamic games; Belief in future rationality; Backwards rationalizability procedure; Backward dominance procedure; Backward induction (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:83:y:2014:i:c:p:231-254

DOI: 10.1016/j.geb.2013.11.008

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