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Iterated potential and robustness of equilibria

  • Oyama, Daisuke
  • Tercieux, Olivier

For any given set-valued solution concept, it is possible to consider iterative elimination of actions outside the solution set. This paper applies such a procedure to define the concept of iterated monotone potential maximizer (iterated MP-maximizer). It is shown that under some monotonicity conditions, an iterated MP-maximizer is robust to incomplete information [A. Kajii, S. Morris, The robustness of equilibria to incomplete information, Econometrica 65 (1997) 1283-1309] and absorbing and globally accessible under perfect foresight dynamics for a small friction [A. Matsui, K. Matsuyama, An approach to equilibrium selection, J. Econ. Theory 65 (1995) 415-434]. Several simple sufficient conditions under which a game has an iterated MP-maximizer are also provided.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 144 (2009)
Issue (Month): 4 (July)
Pages: 1726-1769

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Handle: RePEc:eee:jetheo:v:144:y:2009:i:4:p:1726-1769
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  13. Tercieux, Olivier, 2006. "p-Best response set," Journal of Economic Theory, Elsevier, vol. 131(1), pages 45-70, November.
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  15. Oyama, Daisuke, 2006. "Agglomeration under Forward-Looking Expectations: Potentials and Global Stability," MPRA Paper 15239, University Library of Munich, Germany.
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  19. Oyama, Daisuke & Takahashi, Satoru & Hofbauer, Josef, 2003. "Monotone Methods for Equilibrium Selection under Perfect Foresight Dynamics," MPRA Paper 6721, University Library of Munich, Germany.
  20. Slade, Margaret E, 1994. "What Does an Oligopoly Maximize?," Journal of Industrial Economics, Wiley Blackwell, vol. 42(1), pages 45-61, March.
  21. Akihiko Matsui & Kiminori Matsuyama, 1991. "An Approach to Equilibrium Selection," Discussion Papers 1065, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  22. Matsuyama, Kiminori, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 617-50, May.
  23. Oyama, Daisuke, 2002. "p-Dominance and Equilibrium Selection under Perfect Foresight Dynamics," Journal of Economic Theory, Elsevier, vol. 107(2), pages 288-310, December.
  24. Kojima, Fuhito, 2006. "Risk-dominance and perfect foresight dynamics in N-player games," Journal of Economic Theory, Elsevier, vol. 128(1), pages 255-273, May.
  25. Morris, S & Song Shin, H, 1996. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," Economics Papers 126, Economics Group, Nuffield College, University of Oxford.
  26. Matsui, Akihiko & Oyama, Daisuke, 2006. "Rationalizable foresight dynamics," Games and Economic Behavior, Elsevier, vol. 56(2), pages 299-322, August.
  27. Kim, Youngse, 1996. "Equilibrium Selection inn-Person Coordination Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 203-227, August.
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  30. S. Morris & R. Rob & H. Shin, 2010. "p-dominance and Belief Potential," Levine's Working Paper Archive 505, David K. Levine.
  31. Tercieux, Olivier, 2006. "p-Best response set and the robustness of equilibria to incomplete information," Games and Economic Behavior, Elsevier, vol. 56(2), pages 371-384, August.
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