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Axiomatic Theory of Equilibrium Selection in Signaling Games with Generic Payoffs

Author

Listed:
  • Govindan, Srihari

    (U of Iowa)

  • Wilson, Robert B.

    (Stanford U)

Abstract

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.

Suggested Citation

  • Govindan, Srihari & Wilson, Robert B., 2008. "Axiomatic Theory of Equilibrium Selection in Signaling Games with Generic Payoffs," Research Papers 2000, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:2000
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    References listed on IDEAS

    as
    1. Govindan, Srihari & Wilson, Robert, 2001. "Direct Proofs of Generic Finiteness of Nash Equilibrium Outcomes," Econometrica, Econometric Society, vol. 69(3), pages 765-769, May.
    2. Mertens, Jean-Francois, 1992. "The small worlds axiom for stable equilibria," Games and Economic Behavior, Elsevier, vol. 4(4), pages 553-564, October.
    3. Jean-François Mertens, 1989. "Stable Equilibria---A Reformulation," Mathematics of Operations Research, INFORMS, vol. 14(4), pages 575-625, November.
    4. Srihari Govindan & Robert Wilson, 2009. "On Forward Induction," Econometrica, Econometric Society, vol. 77(1), pages 1-28, January.
    5. MERTENS, Jean-François, 1989. "Stable equilibria - a reformulation. Part I. Definition and basic properties," LIDAM Reprints CORE 866, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 179-221.
    7. 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.
    8. Srihari Govindan & Robert Wilson, 2006. "Metastable Equilibria," Levine's Bibliography 122247000000001211, UCLA Department of Economics.
    9. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-661, May.
    10. Srihari Govindan & Tilman Klumpp, 2003. "Perfect equilibrium and lexicographic beliefs," International Journal of Game Theory, Springer;Game Theory Society, vol. 31(2), pages 229-243.
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    13. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-1037, September.
    14. , & , B., 2006. "Sufficient conditions for stable equilibria," Theoretical Economics, Econometric Society, vol. 1(2), pages 167-206, June.
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    Cited by:

    1. Srihari Govindan & Robert Wilson, 2012. "Axiomatic Equilibrium Selection for Generic Two‐Player Games," Econometrica, Econometric Society, vol. 80(4), pages 1639-1699, July.

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