Player-compatible learning and player-compatible equilibrium

Drew Fudenberg and Kevin He

Journal of Economic Theory, 2021, vol. 194, issue C

Abstract: Player-Compatible Equilibrium (PCE) imposes cross-player restrictions on the magnitudes of the players' “trembles” onto different strategies. These restrictions capture the idea that trembles correspond to deliberate experiments by agents who are unsure of the prevailing distribution of play. PCE selects intuitive equilibria in a number of examples where trembling-hand perfect equilibrium (Selten, 1975) and proper equilibrium (Myerson, 1978) have no bite. We show that rational learning and weighted fictitious play imply our compatibility restrictions in a steady-state setting.

Keywords: Non-equilibrium learning; Equilibrium refinements; Trembling-hand perfect equilibrium; Weighted fictitious play (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Player-Compatible Learning and Player-Compatible Equilibrium (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:194:y:2021:i:c:s0022053121000557

DOI: 10.1016/j.jet.2021.105238

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