Approximate Knowledge of Rationality and Correlated Equilibria
We extend Aumann's theorem [Aumann 1987], deriving correlated equilibria as a consequence of common priors and common knowledge of rationality, by explicitly allowing for non-rational behavior. We replace the assumption of common knowledge of rationality with a substantially weaker one, joint p-belief of rationality, where agents believe the other agents are rational with probability p or more. We show that behavior in this case constitutes a kind of correlated equilibrium satisfying certain p-belief constraints, and that it varies continuously in the parameters p and, for p sufficiently close to one, with high probability is supported on strategies that survive the iterated elimination of strictly dominated strategies. Finally, we extend the analysis to characterizing rational expectations of interim types, to games of incomplete information, as well as to the case of non-common priors.
|Date of creation:||Jun 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +34 93 542-1222
Fax: +34 93 542-1223
Web page: http://www.barcelonagse.eu
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Borgers Tilman, 1994.
"Weak Dominance and Approximate Common Knowledge,"
Journal of Economic Theory,
Elsevier, vol. 64(1), pages 265-276, October.
- Sergiu Hart, 2004.
Discussion Paper Series
dp372, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- Sergiu Hart, 2013. "Adaptive Heuristics," World Scientific Book Chapters, in: Simple Adaptive Strategies From Regret-Matching to Uncoupled Dynamics, chapter 11, pages 253-287 World Scientific Publishing Co. Pte. Ltd..
- Sergiu Hart, 2005. "Adaptive Heuristics," Econometrica, Econometric Society, vol. 73(5), pages 1401-1430, 09.
When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:642. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar)
If references are entirely missing, you can add them using this form.