Entropic selection of Nash equilibrium
AbstractThis study argues that Nash equilibria with less variations in players' best responses are more appealing. To that regard, a notion measuring such variations, the entropic selection of Nash equilibrium, is presented: For any given Nash equilibrium, we consider the cardinality of the support of a player's best response against others' strategies that are sufficiently close to the behavior specified. These cardinalities across players are then aggregated with a real-valued function on whose form we impose no restrictions apart from the natural limitation to nondecreasingness in order to obtain equilibria with less variations. We prove that the entropic selection of Nash equilibrium is non-empty and admit desirable properties. Some well-known games, each of which display important insights about virtues / problems of various equilibrium notions, are considered; and, in all of these games our notion displays none of the criticisms associated with these examples. These examples also show that our notion does not have any containment relations with other associated and well-known refinements, perfection, properness and persistence.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37132.
Date of creation: 29 Feb 2012
Date of revision:
Entropic Selection of Nash Equilibrium; Refinements of Nash Equilibrium;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-14 (All new papers)
- NEP-GTH-2012-03-14 (Game Theory)
- NEP-MIC-2012-03-14 (Microeconomics)
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