Rationalizable Conjectural Equilibrium: Between Nash and Rationalizability
AbstractFor a steady state to be a Nash equilibrium the agents have to perfectly observe the actions of others. This paper suggests a solution concept for cases where players observe only an imperfect signal of what the others' actions are. The model is enriched by specifying the signal that each player has about the actions taken by the others. The solution, which we call rationalizbale conjectural equilibrium (RCE), is a profile of actions such that each player's action is optimal, given the assumption that it is common knowledge that all players maximize their expected utility given their knowledge. The RCE occupies an intermediary position between Nash equilibrium on one hand and Rationalizability style Bernheim-Pearce on the other hand. The concept is demonstrated by several examples in which it refines the rationalizability concept and still is not equivalent to Nash equilibrium.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 6 (1994)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/inca/622836
Other versions of this item:
- A. Rubinstein & A. Wolinsky, 2010. "Rationalizable Conjectural Equilibrium: Between Nash and Rationalizability," Levine's Working Paper Archive 369, David K. Levine.
- Ariel Rubinstein & Asher Wolinsky, 1991. "Rationalizable Conjectural Equilibrium: Between Nash and Rationalizability," Discussion Papers 933, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Battigalli, Pierpaolo, 2003. "Rationalizability in infinite, dynamic games with incomplete information," Research in Economics, Elsevier, vol. 57(1), pages 1-38, March.
- D. B. Bernheim, 2010.
"Rationalizable Strategic Behavior,"
Levine's Working Paper Archive
514, David K. Levine.
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