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Equilibrium Selection in Sequential Games with Imperfect Information

Jon Eguia (), Aniol Llorente-Saguer (), Rebecca Morton () and Antonio Nicolo' ()

No 2014_04, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: Games with imperfect information often feature multiple equilibria, which depend on beliefs off the equilibrium path. Standard selection criteria such as passive beliefs, symmetric beliefs or wary beliefs rest on ad hoc restrictions on beliefs. We propose a new selection criterion that imposes no restrictions on beliefs: we select the action profi?le that is supported in equilibrium by the largest set of beliefs. We conduct experiments to test the predictive power of the existing and our novel selection criteria in two applications: a game of vertical multi-lateral contracting, and a game of electoral competition. We fi?nd that our selection criterion outperforms the other selection criteria.

Keywords: imperfect information; equilibrium selection; passive beliefs; symmetric beliefs; vertical contract- ing; multiple equilibria (search for similar items in EconPapers)
JEL-codes: H41 C72 D86 D72 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-gth, nep-hpe and nep-mic
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Related works:
Journal Article: Equilibrium selection in sequential games with imperfect information (2018) Downloads
Working Paper: Equilibrium Selection in Sequential Games with Imperfect Information (2014) Downloads
Working Paper: Equilibrium Selection in Sequential Games with Imperfect Information (2014) Downloads
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