Refinements of rationalizability for normal-form games
AbstractIn normal-form games, rationalizability (Bernheim , Pearce ) on its own fails to exclude some very implausible strategy choices. Three main refinements of ra- tionalizability have been proposed in the literature: cautious, perfect, and proper rationalizability. Nevertheless, some of these refinements also fail to eliminate un- reasonable outcomes and suffer from several drawbacks. Therefore, we introduce the trembling-hand rationalizability concept, where the players’ actions have to be best responses also against perturbed conjectures. We also propose another refinement: weakly perfect rationalizability, where players’ actions that are not best responses are only played with a very small probability. We show the relationship between perfect rationalizability and weakly perfect ratio- nalizability as well as the relationship between proper rationalizability and weakly perfect rationalizability : weakly perfect rationalizability is a weaker refinement than both perfect and proper rationalizability. Moreover, in two-player games it holds that weakly perfect rationalizability is a weaker refinement than trembling-hand rational- izability. The other relationships between the various refinements are illustrated by means of examples. For the relationship between any other two refinements we give examples showing that the remaining set of strategies corresponding to the first re- finement can be either smaller or larger than the one corresponding to the second refinement.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997002.
Date of creation: 01 Jan 1997
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Other versions of this item:
- Vincent J. Vannetelbosch & P. Jean-Jacques Herings, 1999. "Refinements of rationalizability for normal-form games," International Journal of Game Theory, Springer, vol. 28(1), pages 53-68.
- HERINGS, P. Jean-Jacques & ANNETELBOSCH, Vincent J., . "Refinements of rationalizability for normal-form games," CORE Discussion Papers RP -1378, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Herings, P.J.J. & Vannetelbosch, V., 1997. "Refinements of Rationalizability for Normal-Form Games," Discussion Paper 1997-03, Tilburg University, Center for Economic Research.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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