IDEAS home Printed from https://ideas.repec.org/a/eee/gamebe/v157y2026icp516-534.html

The refinement of Nash equilibrium based on equilibrium models of imperfectly rational behavior

Author

Listed:
  • Velez, Rodrigo A.
  • Brown, Alexander L.

Abstract

This paper introduces a refinement of Nash equilibrium (NE) to determine the relevance of weakly dominated NE in games. We adapt Harsanyi (1973)'s concept of “approachability,” originally based on games with randomly disturbed payoffs, and extend it to a broader family that encompasses the most widely used equilibrium models of imperfectly rational behavior. We identify a singular NE refinement, approximate payoff monotone equilibrium (APME), that coincides with the set of NE that are approachable by regular quantal response equilibria as well as control cost models. We advocate for APME based on its 1) foundation in models that rationalize empirically observed behavior; 2) ability to discriminate between equilibria without automatically discarding weakly dominated behavior; and 3) computational simplicity in applications where the structure of NE is known. We illustrate the value of APME in three applications in which empirical studies suggest that weakly dominated NE are relevant.

Suggested Citation

  • Velez, Rodrigo A. & Brown, Alexander L., 2026. "The refinement of Nash equilibrium based on equilibrium models of imperfectly rational behavior," Games and Economic Behavior, Elsevier, vol. 157(C), pages 516-534.
    • Handle: RePEc:eee:gamebe:v:157:y:2026:i:c:p:516-534
    DOI: 10.1016/j.geb.2025.01.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0899825625000065
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.geb.2025.01.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:157:y:2026:i:c:p:516-534. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.