Nash Equilibrium without Mutual Knowledge of Rationality

Kin Chung Lo

Working Papers from University of Toronto, Department of Economics

Abstract: This paper defines an equilibrium concept for general preferences in two person normal form games. It collapses to Nash Equilibrium when preferences are represented by the expected utility model. An important characteristic of the equilibrium concept is that player i does not necessarily know that player j is rational, but she views rationality as infinitely more likely than irrationality. For suitable models of preferences, the equilibrium concept predicts that a player will take a "cautious" strategy that is not a best response in any Nash Equilibrium.

JEL-codes: C72 D81 (search for similar items in EconPapers)
Pages: 17 pages
Date: 1995-07-09
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Nash equilibrium without mutual knowledge of rationality (1999)
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