Robust equilibrium outcomes in sequential games under almost common certainty of payoffs
Satoru Takahashi and
Journal of Economic Theory, 2020, vol. 188, issue C
We analyze the robustness of equilibria in sequential games when there is almost common certainty of payoffs. We show that a generic extensive-form game may have no robust equilibrium behavior, but has at least one robust equilibrium outcome, which is induced by a proper equilibrium in its normal-form representation. Therefore, backward induction leads to a unique robust outcome in a generic perfect-information game. We also discuss close relation between robustness to incomplete information and strategic stability. Finally, we present the implications of our results for the robustness of subgame-perfect implementation.
Keywords: Incomplete information; Robustness; Higher-order beliefs; Refinements; Subgame-perfect implementation (search for similar items in EconPapers)
JEL-codes: C72 C73 D82 D83 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:188:y:2020:i:c:s0022053118302758
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