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Axiomatic Theory of Equilibrium Selection in Signalling Games with Generic Payoffs

  • Srihari Govindan
  • Robert Wilson

Three axioms from decision theory select sets of Nash equilibria of signaling games in extensive form with generic payoffs. The axioms require undominated strategies (admissibility), inclusion of a sequential equilibrium (backward induction), and dependence only on the game's normal form even when embedded in a larger game with redundant strategies or irrelevant players (small worlds). The axioms are satisfied by a set that is stable (Mertens, 1989) and conversely the axioms imply that each selected set is stable and thus an essential component of admissible equilibria with the same outcome.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 122247000000002381.

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Date of creation: 05 Oct 2008
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Handle: RePEc:cla:levarc:122247000000002381
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  1. Donald A. Walker (ed.), 2000. "Equilibrium," Books, Edward Elgar, volume 0, number 1585, 6.
  2. Wilson, Robert B. & Govindan, Srihari, 2006. "Sufficient conditions for stable equilibria," Theoretical Economics, Econometric Society, vol. 1(2), pages 167-206, June.
  3. In-Koo Cho & David M. Kreps, 1997. "Signaling Games and Stable Equilibria," Levine's Working Paper Archive 896, David K. Levine.
  4. GOVINDAN, Srihari & MERTENS, Jean-François, . "An equivalent definition of stable equilibria," CORE Discussion Papers RP -1737, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Cho, In-Koo & Sobel, Joel, 1990. "Strategic stability and uniqueness in signaling games," Journal of Economic Theory, Elsevier, vol. 50(2), pages 381-413, April.
  6. Banks, Jeffrey S. & Sobel, Joel., 1985. "Equilibrium Selection in Signaling Games," Working Papers 565, California Institute of Technology, Division of the Humanities and Social Sciences.
  7. Govindan, Srihari & Wilson, Robert, 2001. "Direct Proofs of Generic Finiteness of Nash Equilibrium Outcomes," Econometrica, Econometric Society, vol. 69(3), pages 765-69, May.
  8. Srihari Govindan & Tilman Klumpp, 2003. "Perfect equilibrium and lexicographic beliefs," International Journal of Game Theory, Springer, vol. 31(2), pages 229-243.
  9. Ying Chen & Navin Kartik & Joel Sobel, 2008. "Selecting Cheap-Talk Equilibria," Econometrica, Econometric Society, vol. 76(1), pages 117-136, 01.
  10. Kohlberg, Elon & Reny, Philip J., 1997. "Independence on Relative Probability Spaces and Consistent Assessments in Game Trees," Journal of Economic Theory, Elsevier, vol. 75(2), pages 280-313, August.
  11. Srihari Govindan & Robert Wilson, 2006. "Essential Equilibria," Levine's Bibliography 122247000000001035, UCLA Department of Economics.
  12. Srihari Govindan & Robert Wilson, 2008. "On Forward Induction," Levine's Working Paper Archive 122247000000001859, David K. Levine.
  13. KOHLBERG, Elon & MERTENS, Jean-François, . "On the strategic stability of equilibria," CORE Discussion Papers RP -716, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. MERTENS, Jean-François, . "The small worlds axiom for stable equilibria," CORE Discussion Papers RP -1015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Govindan, Srihari & Wilson, Robert B., 2007. "Metastable Equilibria," Research Papers 1934r, Stanford University, Graduate School of Business.
  16. Mertens, J.-F., 1988. "Stable equilibria - a reformulation," CORE Discussion Papers 1988038, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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