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Strict Incentives and Strategic Uncertainty

Author

Listed:
  • Hans Carlsson
  • Philipp Christoph Wichardt

Abstract

This paper proposes a comprehensive perspective on the question of self-enforcing solutions for normal form games. While this question has been widely discussed in the literature, the focus is usually either on strict incentives for players to stay within the proposed solution or on strategic uncertainty, i.e. robustness to trembles. The present approach combines both requirements in proposing the concept of robust sets, i.e. sets of strategy profiles which satisfy both strict incentives and robustness to strategic uncertainty. The result is a set valued solution, a variant of which is shown to exist for all finite normal form games.

Suggested Citation

  • Hans Carlsson & Philipp Christoph Wichardt, 2019. "Strict Incentives and Strategic Uncertainty," CESifo Working Paper Series 7715, CESifo.
  • Handle: RePEc:ces:ceswps:_7715
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp7715.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    game theory; self-enforcing solution; strict incentives; strategic uncertainty;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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