Sequential Equilibria in Mixed Strategies

Francesc Dilmé ()
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Francesc Dilmé: University of Bonn

No 373, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: We analyze limiting equilibrium behavior along perturbations of a game in which both nature and strategic players tremble with small probability. We show that allowing nature to tremble to zero-probability actions expands the set of sequential equilibria and contracts the set of sequentially stable outcomes while preserving their existence. By extending a game through adding initial zero-probability moves by nature, we identify conditions for the existence of reputation effects, that is, changes in the model’s predictions due to the presence of payoff types. Finally, we discuss the relationship between reputation effects and forward induction arguments

Keywords: Sequential equilibria; purification; mixed strategies (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Pages: 37
Date: 2025-10
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:373

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