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Rationality of Final Decisions Leads to Sequential Equilibrium

In: ICM Millennium Lectures on Games

Author

Listed:
  • Ryuichiro Ishikawa

    (Hitotsubashi University, Graduate School of Economics)

  • Takashi Matsuhisa

    (Ibaraki National College of Technology, Department of Liberal Arts and Sciences)

Abstract

Summary This article investigateS epistemic conditions for a sequential equilibrium in an extensive form game with imperfect information: If players mutually know that all players maximize own expected payoffs for any information sets in their final decisions, then their behaviors with belief yield a sequential equilibrium. This result is an extension of [2] in a perfect information game In this article, we propose the notion of μ-rationality, by which we mean that player knows that he maximizes his own payoff according to the common-belief μ. We also introduce the notion of μ-consistency in imperfect information game. Our main theorem states that mutual knowledge of both μ-rationality and μ-consistency induces a sequential equilibrium outcome in an extensive form game.

Suggested Citation

  • Ryuichiro Ishikawa & Takashi Matsuhisa, 2003. "Rationality of Final Decisions Leads to Sequential Equilibrium," Springer Books, in: Leon A. Petrosyan & David W. K. Yeung (ed.), ICM Millennium Lectures on Games, pages 193-204, Springer.
    • Handle: RePEc:spr:sprchp:978-3-662-05219-8_12
    DOI: 10.1007/978-3-662-05219-8_12
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