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Observable Implications of Nash and Subgame- Perfect Behavior in Extensive Games

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Author Info

  • Indrajit Ray
  • Susan Snyder

Abstract

We provide necessary and sufficient conditions for observed outcomes in extensive game forms, in which preferences are unobserved, to be rationalized first, weakly, as a Nash equilibrium and then, fully, as the unique subgame-perfect equilibrium. Thus, one could use these conditions to find that play is (a) consistent with subgame-perfect equilibrium, or (b) not consistent with subgame-perfect behavior but is consistent with Nash equilibrium, or (c) consistent with neither.

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File URL: ftp://ftp.bham.ac.uk/pub/RePEc/pdf/04-14R.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 04-14r.

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Length: 19 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:bir:birmec:04-14r

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Postal: Edgbaston, Birmingham, B15 2TT
Web page: http://www.economics.bham.ac.uk
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Related research

Keywords: Revealed Preference; Consistency; Subgame- Perfect Equilibrium;

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References

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  1. BOSSERT, Walter & SPRUMONT, Yves, 2000. "Core Retionalizability in Two-Agent Exchange Economies," Cahiers de recherche 2000-09, Universite de Montreal, Departement de sciences economiques.
  2. Walter Bossert & Yves Sprumont, 2013. "Every Choice Function Is Backwards‐Induction Rationalizable," Econometrica, Econometric Society, vol. 81(6), pages 2521-2534, November.
  3. Adam Galambos, 2005. "Revealed Preference in Game Theory," 2005 Meeting Papers 776, Society for Economic Dynamics.
  4. Lin Zhou, 2005. "The structure of the Nash equilibrium sets of standard 2-player games," Economic Theory, Springer, vol. 26(2), pages 301-308, 08.
  5. Andrés Carvajal & Rahul Deb & James Fenske & John K.‐H. Quah, 2013. "Revealed Preference Tests of the Cournot Model," Econometrica, Econometric Society, vol. 81(6), pages 2351-2379, November.
  6. Ruediger Bachmann, 2006. "Testable Implications of Pareto Efficiency and Individualrationality," Economic Theory, Springer, vol. 29(3), pages 489-504, November.
  7. Bossert, Walter & Sprumont, Yves, 2003. "Efficient and non-deteriorating choice," Mathematical Social Sciences, Elsevier, vol. 45(2), pages 131-142, April.
  8. Laurens CHERCHYE & Thomas DEMUYNCK & Bram DE ROCK, 2011. "Nash bargained consumption decisions: a revealed preference analysis," Center for Economic Studies - Discussion papers ces11.07, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  9. BOSSERT, Walter & SPRUMONT, Yves, 2001. "Non-Deteriorating Choice," Cahiers de recherche 2001-01, Universite de Montreal, Departement de sciences economiques.
  10. Sprumont, Yves, 2001. "Paretian Quasi-orders: The Regular Two-Agent Case," Journal of Economic Theory, Elsevier, vol. 101(2), pages 437-456, December.
  11. Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
  12. Diewert, W. E. & Parkan, C., 1985. "Tests for the consistency of consumer data," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 127-147.
  13. Demuynck, Thomas & Lauwers, Luc, 2009. "Nash rationalization of collective choice over lotteries," Mathematical Social Sciences, Elsevier, vol. 57(1), pages 1-15, January.
  14. Deb, Rahul, 2009. "A testable model of consumption with externalities," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1804-1816, July.
  15. Indrajit Ray & Lin Zhou, . "Game Theory Via Revealed Preferences," Discussion Papers 00/15, Department of Economics, University of York.
  16. Sen, Amartya K, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Wiley Blackwell, vol. 38(115), pages 307-17, July.
  17. Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2001. "Rationalizing Choice Functions by Multiple Rationales," Discussion Paper Series dp278, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  18. Lee, SangMok, 2012. "The testable implications of zero-sum games," Journal of Mathematical Economics, Elsevier, vol. 48(1), pages 39-46.
  19. Xu, Yongsheng & Zhou, Lin, 2007. "Rationalizability of choice functions by game trees," Journal of Economic Theory, Elsevier, vol. 134(1), pages 548-556, May.
  20. Sprumont, Yves, 2000. "On the Testable Implications of Collective Choice Theories," Journal of Economic Theory, Elsevier, vol. 93(2), pages 205-232, August.
  21. Bachmann, Ruediger, 2006. "Testable implications of coalitional rationality," Economics Letters, Elsevier, vol. 93(1), pages 101-105, October.
  22. Penalva Jose & Ryall Michael D, 2008. "Empirical Implications of Information Structure in Finite Extensive Form Games," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-49, January.
  23. Andrés Carvajal, 2010. "The testable implications of competitive equilibrium in economies with externalities," Economic Theory, Springer, vol. 45(1), pages 349-378, October.
  24. Carvajal, Andres & Ray, Indrajit & Snyder, Susan, 2004. "Equilibrium behavior in markets and games: testable restrictions and identification," Journal of Mathematical Economics, Elsevier, vol. 40(1-2), pages 1-40, February.
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Cited by:
  1. Pierre-André Chiappori & Olivier Donni, 2006. "Learning from a Piece of Pie: the Empirical Content of Nash Bargaining," Cahiers de recherche 0619, CIRPEE.
  2. BOSSERT, Walter & SPRUMONT, Yves, 2013. "Every Choice Function is Backwards-Induction Rationalizable," Cahiers de recherche 2013-01, Universite de Montreal, Departement de sciences economiques.
  3. Lee, SangMok, 2012. "The testable implications of zero-sum games," Journal of Mathematical Economics, Elsevier, vol. 48(1), pages 39-46.

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