IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v89y1999i2p165-185.html
   My bibliography  Save this article

Payoff Information and Self-Confirming Equilibrium

Author

Listed:
  • Dekel, Eddie
  • Fudenberg, Drew
  • Levine, David K.

Abstract

In a self-confirming equilibrium, each player correctly forecasts the actions that opponents will take along the equilibrium path, but may be mistaken about the way that opponents would respond to deviations. This models a steady state of a learning process in which players observe actions played by their opponents, rather than a complete specification of their strategies. Consequently, players need not receive evidence that their forecasts of off-path play are incorrect. In practice, players understand that opponents are rational and have some information about their opponents payoffs. This paper develops a refinement of self-confirming equilibrium that incorporates the effects of such information. We show that this concept is robust. We also discuss its relationship to other concepts. In particular, we show that it is closely connected to assuming almost common certainty of payoffs in an epistemic model with independent beliefs.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Dekel, Eddie & Fudenberg, Drew & Levine, David K., 1999. "Payoff Information and Self-Confirming Equilibrium," Journal of Economic Theory, Elsevier, vol. 89(2), pages 165-185, December.
    • Handle: RePEc:eee:jetheo:v:89:y:1999:i:2:p:165-185
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022-0531(99)92576-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Elchanan Ben-Porath, 1997. "Rationality, Nash Equilibrium and Backwards Induction in Perfect-Information Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(1), pages 23-46.
    2. Rubinstein Ariel & Wolinsky Asher, 1994. "Rationalizable Conjectural Equilibrium: Between Nash and Rationalizability," Games and Economic Behavior, Elsevier, vol. 6(2), pages 299-311, March.
    3. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    4. Fudenberg, Drew & Levine, David K, 1993. "Steady State Learning and Nash Equilibrium," Econometrica, Econometric Society, vol. 61(3), pages 547-573, May.
    5. Borgers Tilman, 1994. "Weak Dominance and Approximate Common Knowledge," Journal of Economic Theory, Elsevier, vol. 64(1), pages 265-276, October.
    6. Basu, Kaushik, 1988. "Strategic irrationality in extensive games," Mathematical Social Sciences, Elsevier, vol. 15(3), pages 247-260, June.
    7. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, April.
    8. Costa-Gomes, Miguel & Crawford, Vincent P & Broseta, Bruno, 2001. "Cognition and Behavior in Normal-Form Games: An Experimental Study," Econometrica, Econometric Society, vol. 69(5), pages 1193-1235, September.
    9. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-1050, July.
    10. D. Pearce, 2010. "Rationalizable Strategic Behavior and the Problem of Perfection," Levine's Working Paper Archive 523, David K. Levine.
    11. Drew Fudenberg & David M. Kreps & David K. Levine, 2008. "On the Robustness of Equilibrium Refinements," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 5, pages 67-93, World Scientific Publishing Co. Pte. Ltd..
    12. Blume, Lawrence E & Zame, William R, 1994. "The Algebraic Geometry of Perfect and Sequential Equilibrium," Econometrica, Econometric Society, vol. 62(4), pages 783-794, July.
    13. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-1028, July.
    14. 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.
    15. Fudenberg, Drew & Levine, David K, 1993. "Self-Confirming Equilibrium," Econometrica, Econometric Society, vol. 61(3), pages 523-545, May.
    16. Dekel, Eddie & Fudenberg, Drew, 1990. "Rational behavior with payoff uncertainty," Journal of Economic Theory, Elsevier, vol. 52(2), pages 243-267, December.
    17. Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, vol. 1(2), pages 170-190, June.
    18. Battigalli, Pierpaolo, 2003. "Rationalizability in infinite, dynamic games with incomplete information," Research in Economics, Elsevier, vol. 57(1), pages 1-38, March.
    19. Reny Philip J., 1993. "Common Belief and the Theory of Games with Perfect Information," Journal of Economic Theory, Elsevier, vol. 59(2), pages 257-274, April.
    20. Gul, Faruk, 1996. "Rationality and Coherent Theories of Strategic Behavior," Journal of Economic Theory, Elsevier, vol. 70(1), pages 1-31, July.
    21. Philip J. Reny, 1992. "Rationality in Extensive-Form Games," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 103-118, Fall.
    22. D. Fudenberg & D. M. Kreps, 2010. "Learning in Extensive Games, I: Self-Confirming Equilibrium," Levine's Working Paper Archive 382, David K. Levine.
    23. Ben-Porath, E., 1992. "Rationality, Nash Equilibrium and Backward Induction in Perfect Information Games," Papers 14-92, Tel Aviv - the Sackler Institute of Economic Studies.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dekel, Eddie & Siniscalchi, Marciano, 2015. "Epistemic Game Theory," Handbook of Game Theory with Economic Applications,, Elsevier.
    2. Xiao Luo & Ben Wang, 2022. "An epistemic characterization of MACA," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(4), pages 995-1024, June.
    3. Perea Andrés, 2003. "Rationalizability and Minimal Complexity in Dynamic Games," Research Memorandum 047, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Asheim, Geir B. & Brunnschweiler, Thomas, 2023. "Epistemic foundation of the backward induction paradox," Games and Economic Behavior, Elsevier, vol. 141(C), pages 503-514.
    5. Battigalli, Pierpaolo & Siniscalchi, Marciano, 2007. "Interactive epistemology in games with payoff uncertainty," Research in Economics, Elsevier, vol. 61(4), pages 165-184, December.
    6. Vincent J. Vannetelbosch & P. Jean-Jacques Herings, 2000. "The equivalence of the Dekel-Fudenberg iterative procedure and weakly perfect rationalizability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 677-687.
    7. Battigalli, Pierpaolo & Siniscalchi, Marciano, 1999. "Hierarchies of Conditional Beliefs and Interactive Epistemology in Dynamic Games," Journal of Economic Theory, Elsevier, vol. 88(1), pages 188-230, September.
    8. Barelli, Paulo & Galanis, Spyros, 2013. "Admissibility and event-rationality," Games and Economic Behavior, Elsevier, vol. 77(1), pages 21-40.
    9. Battigalli Pierpaolo & Siniscalchi Marciano, 2003. "Rationalization and Incomplete Information," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-46, June.
    10. Perea, Andrés, 2017. "Forward induction reasoning and correct beliefs," Journal of Economic Theory, Elsevier, vol. 169(C), pages 489-516.
    11. Vincent J. Vannetelbosch & P. Jean-Jacques Herings, 2000. "The equivalence of the Dekel-Fudenberg iterative procedure and weakly perfect rationalizability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 677-687.
    12. Perea ý Monsuwé, A., 2003. "Proper rationalizability and belief revision in dynamic games," Research Memorandum 048, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    13. Hu, Tai-Wei, 2007. "On p-rationalizability and approximate common certainty of rationality," Journal of Economic Theory, Elsevier, vol. 136(1), pages 379-391, September.
    14. Asheim, G.B. & Dufwenberg, M., 1996. "Admissibility and Common Knowledge," Discussion Paper 1996-16, Tilburg University, Center for Economic Research.
    15. Asheim, Geir B. & Dufwenberg, Martin, 2003. "Admissibility and common belief," Games and Economic Behavior, Elsevier, vol. 42(2), pages 208-234, February.
    16. Battigalli, Pierpaolo, 1997. "On Rationalizability in Extensive Games," Journal of Economic Theory, Elsevier, vol. 74(1), pages 40-61, May.
    17. Fudenberg, Drew & Levine, David K., 2009. "Self-confirming equilibrium and the Lucas critique," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2354-2371, November.
    18. Asheim, Geir B., 2002. "On the epistemic foundation for backward induction," Mathematical Social Sciences, Elsevier, vol. 44(2), pages 121-144, November.
    19. Dieter Balkenborg & Josef Hofbauer & Christoph Kuzmics, 2015. "The refined best-response correspondence in normal form games," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(1), pages 165-193, February.
    20. Antonio Quesada, 2002. "Belief system foundations of backward induction," Theory and Decision, Springer, vol. 53(4), pages 393-403, December.

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

    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:jetheo:v:89:y:1999:i:2:p:165-185. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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/622869 .

    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.