Individually-Consistent Sequential Equilibrium

Gisèle Umbhauer and Arnaud Wolff

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: We introduce a new equilibrium concept, called the individually-consistent sequential equilibrium (ICSE). This concept is more permissive than the sequential equilibrium (Kreps, Wilson (1982)) but more demanding than the self-confirming one (Fudenberg, Levine (1993)). We require that players share common beliefs on the actions planned to be played at all the information sets, but not on the potential deviations. Therefore, in contrast to Kreps, Wilson (1982), we allow different players to have in mind different perturbation systems, or alternative hypotheses. This is motivated by the fact that beliefs about unobserved events are by essence not verifiable.

Keywords: Sequential Equilibrium; Consistency; Perturbations; Beliefs. (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-gth and nep-mic
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2019-39

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