In this paper we present a model for games with perfect information in which the players, upon observing an unexpected move, may revise their beliefs about the opponents'' preferences over outcomes. For a given profile P of preference relations over outcomes, we impose the following three principles: (1) players initially believe that opponents have preference relations as specified by P; (2) players believe at every instance of the game that each opponent is carrying out an optimal strategy; and (3) beliefs about the opponents'' preference relations over outcomes should be revised in a minimal way. It is shown that every player whose preference relation is given by P, and who throughout the game respects common belief in the events (1), (2) and (3), has a unique optimal strategy, namely his backward induction strategy in the game induced by P. We finally show that replacing the minimal belief revision principle (3) by the more modest requirement of Bayesian updating leads exactly to the Dekel-Fudenberg procedure in the game induced by P.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number
032.
References listed on IDEAS 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.: