Generalized Nash equilibrium with stable belief hierarchies in static games with unawareness

Yasuo Sasaki ()
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Yasuo Sasaki: Japan Advanced Institute of Science and Technology

Annals of Operations Research, 2017, vol. 256, issue 2, No 6, 284 pages

Abstract: Abstract In game theory, recently models and solution concepts of games with unawareness have been developed. Focusing on static games with unawareness, this paper discusses generalized Nash equilibrium, an existing equilibrium concept. Some generalized Nash equilibria can be unstable in the sense that, once an equilibrium is played, some agent’s belief is falsified at some level of someone’s perception hierarchy. Based on the observation, we characterize a particular class of generalized Nash equilibrium that expresses stable belief hierarchies so that it can avoid such a problem. This class of equilibrium can be motivated as a stable convention of the game. We also study how unawareness can affect the agents’ behaviors in a stationary state.

Keywords: Game theory; Unawareness; Generalized Nash equilibrium; Belief hierarchy; Perception hierarchy; Convention (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s10479-016-2266-5

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