Discovery and Equilibrium in Games with Unawareness
No 340, Working Papers from University of California, Davis, Department of Economics
Equilibrium notions for games with unawareness in the literature cannot be interpreted as steady-states of a learning process because players may discover novel actions during play. In this sense, many games with unawareness are ``self-destroying'' as a player's representation of the game may change after playing it once. We define discovery processes where at each state there is an extensive-form game with unawareness that together with the players' play determines the transition to possibly another extensive-form game with unawareness in which players are now aware of actions that they have discovered. A discovery process is rationalizable if players play extensive-form rationalizable strategies in each game with unawareness. We show that for any game with unawareness there is a rationalizable discovery process that leads to a self-confirming game that possesses a self-confirming equilibrium in extensive-form rationalizable strategies. This notion of equilibrium can be interpreted as steady-state of both a discovery and learning process.
Keywords: Self-confirming equilibrium; conjectural equilibrium; extensive-form rationalizability; unawareness; extensive-form games; equilibrium; learning; discovery (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-mic
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Journal Article: Discovery and equilibrium in games with unawareness (2021)
Working Paper: Discovery and Equilibrium in Games with Unawareness (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cda:wpaper:340
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