A Formal Definition of Perfect Bayesian Equilibrium for Extensive Games

Julio Gonzalez-Diaz and Miguel Melendez-Jimenez

No 1446, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: Often, perfect bayesian equilibrium is loosely defined by stating that players should be sequentially rational given some beliefs in which Bayes rule is applied “whenever possible”. We show that there are games in which it is not clear what “whenever possible” means. Then, we provide a simple definition of perfect bayesian equilibrium for general extensive games that refines both weak perfect equilibrium and subgame perfect equilibrium.

Keywords: non-cooperative game theory; equilibrium concepts; perfect bayesian; Bayes rule. (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2007-06

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