Refinements of Rationalizability for Normal-Form Games: The Main Ideas

Vincent J. Vannetelbosch
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Vincent J. Vannetelbosch: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES); UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)

No 1996012, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: In normal-form games, rationalizability (Bernheim, 1984, Pearce, 1984) on its own fails to exclude some very implausible strategy choices. Three main refinements of rationalizability have been proposed in the literature: cautious, perfect, and proper rationalizability. Nevertheless, some of these refinements also fail to eliminate unreasonable outcomes and suffer from some drawbacks. Therefore, we introduce the trembling-hand rationalizability concept, where the players' actions have to be best responses also against perturbed conjectures. We also propose another refinement: "epsilon"-perfect rationalizability; and we show that every proper rationalizable strategy profile is also "epsilon"-perfect rationalizable. The differences between the various refinements are illustrated by means of examples.

Keywords: Rationalizability; refinements; normal-form games (search for similar items in EconPapers)
JEL-codes: C78 (search for similar items in EconPapers)
Pages: 22
Date: 1996-03-01
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:1996012

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