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On non-monotonic strategic reasoning

Emiliano Catonini

Games and Economic Behavior, 2020, vol. 120, issue C, 209-224

Abstract: Strong-Δ-Rationalizability introduces first-order belief restrictions in the analysis of forward induction reasoning. Without actual restrictions, it coincides with Strong Rationalizability (Battigalli, 2003; Battigalli and Siniscalchi, 2003). These solution concepts are based on the notion of strong belief (Battigalli and Siniscalchi, 2002). The non-monotonicity of strong belief implies that the predictions of Strong-Δ-Rationalizability can be inconsistent with Strong Rationalizability. I show that Strong-Δ-Rationalizability refines Strong Rationalizability in terms of outcomes when the restrictions correspond to belief in a distribution over terminal nodes. Moreover, under such restrictions, the epistemic priority between rationality and belief restrictions is irrelevant for the predicted outcomes.

Keywords: Strong Rationalizability; Strong-Δ-Rationalizability; Path restrictions; Epistemic priority; Order independence; Backward induction (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.geb.2020.01.004

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Handle: RePEc:eee:gamebe:v:120:y:2020:i:c:p:209-224