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How proper is the dominance-solvable outcome?

Author

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  • Yukio Koriyama

    (Department of Economics, Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)

  • Matias Nunez

    (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique)

Abstract

We examine the conditions under which iterative elimination of weakly dominated strategies refines the set of proper outcomes of a normal-form game. We say that the proper inclusion holds in terms of outcome if the set of outcomes of all proper equilibria in the reduced game is included in the set of all proper outcomes of the original game. We show by examples that neither dominance solvability nor the transference of decision-maker indifference condition (TDI of Marx and Swinkels [1997]) implies proper inclusion. When both dominance solvablility and the TDI condition are satisfied, a positive result arises: the game has a unique stable outcome. Hence, the proper inclusion is guaranteed.

Suggested Citation

  • Yukio Koriyama & Matias Nunez, 2014. "How proper is the dominance-solvable outcome?," Working Papers hal-01074178, HAL.
  • Handle: RePEc:hal:wpaper:hal-01074178
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01074178
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    Keywords

    Proper equilibrium; Weak dominance; Iterated elimination; Proper equilibrium.;

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