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Rational Learning Leads to Nash Equilibrium

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  • Kalai, Ehud
  • Lehrer, Ehud

Abstract

Subjective utility maximizers, in an infinitely repeated game, will learn to predict opponents' future strategies and will converge to play according to a Nash equilibrium of the repeated game. Players' initial uncertainty is placed directly on opponents' strategies and the above result is obtained under the assumption that the individual beliefs are compatible with the chosen strategies. An immediate corollary is that, when playing a Harsanyi-Nash equilibrium of a repeated game of incomplete information about opponents' payoff matrices, players will eventually play a Nash equilibrium of the real game, as if they had complete information. Copyright 1993 by The Econometric Society.

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Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 61 (1993)
Issue (Month): 5 (September)
Pages: 1019-45

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Handle: RePEc:ecm:emetrp:v:61:y:1993:i:5:p:1019-45

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  1. Fudenberg, Drew & Levine, David K, 1993. "Steady State Learning and Nash Equilibrium," Econometrica, Econometric Society, vol. 61(3), pages 547-73, May.
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  17. Kalai, Ehud & Lehrer, Ehud, 1993. "Subjective Equilibrium in Repeated Games," Econometrica, Econometric Society, vol. 61(5), pages 1231-40, September.
  18. Woodford, Michael, 1990. "Learning to Believe in Sunspots," Econometrica, Econometric Society, vol. 58(2), pages 277-307, March.
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