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INTROSPECTION AND EQUILIBRIUM SELECTION IN 2x2 MATRIX GAMES

Author

Listed:
  • Gonzalo Olcina Vauteren

    (Universitat de València)

  • Amparo Urbano Salvador

    (Universitat de València)

Abstract

Game theory lacks an explanation of how players' beliefs are formed and why they are in equilibrium. This is the reason why it has failed to make significant advances with the problem of equilibrium selection even for quite siniple games, as 2x2 games with two strict Nash equilibria. Our paper models the introspection process by which the selected equilibrium is achieved in this class of games. Players begin their analysis with imprecise priors, obtained under weak restrictions formulated as Axioms. For a large class of reasoning dynamics we obtain as the solution the risk dominant Nash equilibrium.

Suggested Citation

  • Gonzalo Olcina Vauteren & Amparo Urbano Salvador, 1993. "INTROSPECTION AND EQUILIBRIUM SELECTION IN 2x2 MATRIX GAMES," Working Papers. Serie AD 1993-01, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:1993-01
    as

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    References listed on IDEAS

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    1. repec:ebl:ecbull:v:3:y:2002:i:2:p:1-7 is not listed on IDEAS
    2. Walter Elberfeld, 1997. "Incentive monotonicity and equilibrium selection in 2×2 matrix games," Journal of Economics, Springer, vol. 65(3), pages 279-290, October.
    3. Radzvilas, Mantas, 2016. "Hypothetical Bargaining and the Equilibrium Selection Problem in Non-Cooperative Games," MPRA Paper 70248, University Library of Munich, Germany.
    4. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December.
    5. Concepción Peñarrubia & Gonzalo Olcina, 2002. "Specific investments and coordination failures," Economics Bulletin, AccessEcon, vol. 3(2), pages 1-7.
    6. Gonzalo Olcina, 1997. "Forward Induction In Games With An Outside Option," Theory and Decision, Springer, vol. 42(2), pages 177-192, March.

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