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Path Perfectness in Games of Perfect Information

Author

Listed:
  • Torben Tranæs

    (Institute of Economics, University of Copenhagen)

Abstract

The strategic implications of ties in extensive form games of perfect information are discussed, and a refinement of subgame-perfect equilibrium suggested. The idea is that threats and promises have to be credible in order to be part of an equilibrium strategy, as usual, but further that, if credible threats or promises exist, they have to be used. We suggest a formalization of this idea and prove existence in any finite game. Furthermore, we illustrate by a simple market game that such an additional requirement to subgame perfectness can restrict essentially the set of equilibria when modeling competitive market interaction. The equilibrium refinement is based on a forward-induction argument.

Suggested Citation

  • Torben Tranæs, 1992. "Path Perfectness in Games of Perfect Information," Discussion Papers 92-12, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:9212
    as

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