Admissibility and event-rationality
Paulo Barelli and
Games and Economic Behavior, 2013, vol. 77, issue 1, 21-40
We develop an approach to providing epistemic conditions for admissible behavior in games. Instead of using lexicographic beliefs to capture infinitely less likely conjectures, we postulate that players use tie-breaking sets to help decide among strategies that are outcome-equivalent given their conjectures. A player is event-rational if she best responds to a conjecture and uses a list of subsets of the other playersʼ strategies to break ties among outcome-equivalent strategies. Using type spaces to capture interactive beliefs, we show that event-rationality and common belief of event-rationality (RCBER) imply S∞W, the set of admissible strategies that survive iterated elimination of dominated strategies. By strengthening standard belief to validated belief, we show that event-rationality and common validated belief of event-rationality (RCvBER) imply IA, the iterated admissible strategies. We show that in complete, continuous and compact type structures, RCBER and RCvBER are nonempty, hence providing epistemic criteria for S∞W and IA.
Keywords: Epistemic game theory; Admissibility; Iterated weak dominance; Common knowledge; Rationality; Completeness (search for similar items in EconPapers)
JEL-codes: C70 C72 (search for similar items in EconPapers)
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Working Paper: Admissibility and Event-Rationality (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:77:y:2013:i:1:p:21-40
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