Common assumption of rationality

H. Jerome Keisler and Byung Soo Lee

Journal of Mathematical Economics, 2023, vol. 109, issue C

Abstract: We build on the work of Brandenburger, Friedenberg, and Keisler (2008, BFK) by showing that rationality and common assumption of rationality (RCAR) is possible in complete lexicographic type structures and characterizes iterated admissibility—i.e., iterated elimination of weakly dominated strategies. Our result is unexpected in light of BFK’s result proving the impossibility of RCAR in continuous complete lexicographic type structures. We reconcile the two by showing that continuous complete lexicographic type structures differ from complete lexicographic type structures that admit RCAR only in how much caution—in a sense that we formalize—is required to assume events.

Keywords: Epistemic game theory; Admissibility; Iterated weak dominance; Assumption; Best-rationalization principle (search for similar items in EconPapers)
JEL-codes: C72 D80 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:109:y:2023:i:c:s030440682300085x

DOI: 10.1016/j.jmateco.2023.102892

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