Refinements of rationalizability for normal-form games
In normal-form games, rationalizability (Bernheim , Pearce ) on its own fails to exclude some very implausible strategy choices. Three main refinements of ra- tionalizability have been proposed in the literature: cautious, perfect, and proper rationalizability. Nevertheless, some of these refinements also fail to eliminate un- reasonable outcomes and suffer from several drawbacks. Therefore, we introduce the trembling-hand rationalizability concept, where the playersâ€™ actions have to be best responses also against perturbed conjectures. We also propose another refinement: weakly perfect rationalizability, where playersâ€™ actions that are not best responses are only played with a very small probability. We show the relationship between perfect rationalizability and weakly perfect ratio- nalizability as well as the relationship between proper rationalizability and weakly perfect rationalizability : weakly perfect rationalizability is a weaker refinement than both perfect and proper rationalizability. Moreover, in two-player games it holds that weakly perfect rationalizability is a weaker refinement than trembling-hand rational- izability. The other relationships between the various refinements are illustrated by means of examples. For the relationship between any other two refinements we give examples showing that the remaining set of strategies corresponding to the first re- finement can be either smaller or larger than the one corresponding to the second refinement.
|Date of creation:||01 Jan 1997|
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- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, June.
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