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INTROSPECTION AND EQUILIBRIUM SELECTION IN 2x2 MATRIX GAMES

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Author Info

  • Gonzalo Olcina Vauteren

    ()
    (Universitat de València)

  • Amparo Urbano Salvador

    (Universitat de València)

Abstract

Game theory lacks an explanation of how players' beliefs are formed and why they are in equilibrium. This is the reason why it has failed to make significant advances with the problem of equilibrium selection even for quite siniple games, as 2x2 games with two strict Nash equilibria. Our paper models the introspection process by which the selected equilibrium is achieved in this class of games. Players begin their analysis with imprecise priors, obtained under weak restrictions formulated as Axioms. For a large class of reasoning dynamics we obtain as the solution the risk dominant Nash equilibrium.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1993-01.pdf
File Function: Fisrt version / Primera version, 1993
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1993-01.

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Length: 60 pages
Date of creation: May 1993
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:1993-01

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References

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  1. Luis Corchón, 1991. "Oligopolistic Competition Among Groups," Working Papers. Serie AD 1991-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  2. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
  3. Mirman, L.J. & Samuelson, L. & Urbano, A., 1989. "Monopoly Experimentation," Papers 8-89-7, Pennsylvania State - Department of Economics.
    • Mirman, Leonard J & Samuelson, Larry & Urbano, Amparo, 1993. "Monopoly Experimentation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 549-63, August.
  4. Dow, James & Werlang, Sergio Ribeiro da Costa, 1992. "Uncertainty Aversion, Risk Aversion, and the Optimal Choice of Portfolio," Econometrica, Econometric Society, vol. 60(1), pages 197-204, January.
  5. KOHLBERG, Elon & MERTENS, Jean-François, . "On the strategic stability of equilibria," CORE Discussion Papers RP -716, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Robert J. Aumann, 2010. "Correlated Equilibrium as an expression of Bayesian Rationality," Levine's Working Paper Archive 661465000000000377, David K. Levine.
  7. Corchon, Luis C., 1994. "Fixed price and quality signals," Mathematical Social Sciences, Elsevier, vol. 27(1), pages 49-58, February.
  8. Herrero, Carmen & Villar, Antonio, 1991. "Vector mappings with diagonal images," Mathematical Social Sciences, Elsevier, vol. 22(1), pages 57-67, August.
  9. Marhuenda, F, 1995. "Distribution of Income and Aggregation of Demand," Econometrica, Econometric Society, vol. 63(3), pages 647-66, May.
  10. Haller, J.E. & Milne, F., 1990. "Naive Bayesian Learning In 2 X 2 Matrix Games," Papers 9071, Tilburg - Center for Economic Research.
  11. Ebbe Hendon & Hans Jørgen Jacobsen & Michael Teit Nielsen & Birgitte Sloth, 1990. "A Learning Process for Games," Discussion Papers 90-20, University of Copenhagen. Department of Economics.
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Cited by:
  1. repec:ebl:ecbull:v:3:y:2002:i:2:p:1-7 is not listed on IDEAS
  2. Jacob K Goeree & Charles A Holt, 2004. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," Levine's Working Paper Archive 618897000000000900, David K. Levine.
  3. Walter Elberfeld, 1997. "Incentive monotonicity and equilibrium selection in 2×2 matrix games," Journal of Economics, Springer, vol. 65(3), pages 279-290, October.
  4. Concepción Peñarrubia & Gonzalo Olcina, 2002. "Specific investments and coordination failures," Economics Bulletin, AccessEcon, vol. 3(2), pages 1-7.
  5. Gonzalo Olcina, 1997. "Forward Induction In Games With An Outside Option," Theory and Decision, Springer, vol. 42(2), pages 177-192, March.

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