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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. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-37, September.
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  25. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
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  27. 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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