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Knowledge and Equilibrium in Games

Author

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  • Adam Brandenburger

Abstract

This paper describes an approach to noncooperative game theory that aims to capture considerations that exercise the minds of real-world strategists. The most commonly used tool of noncooperative game theory is the Nash equilibrium. This raises the question: Are there assumptions on what the players in a game think—including what they think other players think, and so on—that lead to consideration of Nash equilibrium? The paper provides answers to this, and related, questions. The approach of this paper involves analyzing the decision problem facing each player in a strategic ("interactive") situation. In addition to grounding game theory in considerations that are of the essence in actual strategic situations, the approach has a number of other objectives: 1) to make game theory more immediately accessible to people who are trained in decision theory but who are not "game theorists" and 2) to make game theory easier to teach to students. Finally, the approach suggests new directions for research into the nature of strategic situations.

Suggested Citation

  • Adam Brandenburger, 1992. "Knowledge and Equilibrium in Games," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 83-101, Fall.
  • Handle: RePEc:aea:jecper:v:6:y:1992:i:4:p:83-101
    Note: DOI: 10.1257/jep.6.4.83
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.6.4.83
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    References listed on IDEAS

    as
    1. Tan, Tommy Chin-Chiu & da Costa Werlang, Sergio Ribeiro, 1988. "The Bayesian foundations of solution concepts of games," Journal of Economic Theory, Elsevier, vol. 45(2), pages 370-391, August.
    2. Bernheim, B Douglas, 1986. " Axiomatic Characterizations of Rational Choice in Strategic Environme nts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(3), pages 473-488.
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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