Tenable Threats when Nash Equilibrium is the Norm

Francoise Forges and József Sákovics

No 301, Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: We formally assume that players in a game consider Nash Equilibrium (NE) the behavioral norm. In Önite games of perfect information this leads to a refinement of NE: Faithful Nash Equilibrium (FNE). FNE is outcome equivalent to NE of the ìtrimmedî game, obtained by restricting the original tree to its NE paths. Thus, it always exists but it need not be unique. Iterating the norm ensures uniqueness of outcome. FNE may violate backward induction when subgame perfection requires play according to the SPE following a deviation from it. We thus provide an alternative view of tenable threats in equilibrium analysis.

JEL-codes: C72 C73 D01 D83 D91 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-06
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.econ.ed.ac.uk/papers/id301_esedps.pdf (application/pdf)

Related works:
Journal Article: Tenable threats when Nash equilibrium is the norm (2022)
Working Paper: Tenable threats when Nash equilibrium is the norm (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:301

Access Statistics for this paper

More papers in Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh 31 Buccleuch Place, EH8 9JT, Edinburgh. Contact information at EDIRC.
Bibliographic data for series maintained by Research Office ().