Strict Incentives and Strategic Uncertainty
Hans Carlsson and
Philipp Christoph Wichardt
No 7715, CESifo Working Paper Series from CESifo Group Munich
This paper proposes a comprehensive perspective on the question of self-enforcing solutions for normal form games. While this question has been widely discussed in the literature, the focus is usually either on strict incentives for players to stay within the proposed solution or on strategic uncertainty, i.e. robustness to trembles. The present approach combines both requirements in proposing the concept of robust sets, i.e. sets of strategy profiles which satisfy both strict incentives and robustness to strategic uncertainty. The result is a set valued solution, a variant of which is shown to exist for all finite normal form games.
Keywords: game theory; self-enforcing solution; strict incentives; strategic uncertainty (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth, nep-mic, nep-ore and nep-upt
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