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NASH Equilibrium in Lower Probabilities

Author

Listed:
  • Ebbe Hendon

    (Institute of Economics, University of Copenhagen)

  • Hans Jorgen Jacobsen

    (Institute of Economics, University of Copenhagen)

  • Birgitte Sloth

    (Institute of Economics, University of Copenhagen)

  • Torben Tranaes

    (Copenhagen Business School)

Abstract

A Nash equilibrium can be interpreted as a common theory about the players' actions. It is required that the theory is consistent with each player choosing an optimal response to the theory. It is usually required that the theory takes the form of a combination of probability measures on players' strategies. We analyze the effects of relaxing this requirement, allowing the theory to take the form of a lower probability measure, also called a belief function. In particular this allows for a strategy that is never a best reply against probability measures on other players to be part of an equilibrium.

Suggested Citation

  • Ebbe Hendon & Hans Jorgen Jacobsen & Birgitte Sloth & Torben Tranaes, 1995. "NASH Equilibrium in Lower Probabilities," Discussion Papers 95-09, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:9509
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    References listed on IDEAS

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    Cited by:

    1. Jürgen Eichberger & David Kelsey & Burkhard Schipper, 2008. "Granny Versus Game Theorist: Ambiguity in Experimental Games," Theory and Decision, Springer, vol. 64(2), pages 333-362, March.
    2. Roman Kozhan, 2011. "Non-additive anonymous games," International Journal of Game Theory, Springer;Game Theory Society, pages 215-230.
    3. Thomas Jungbauer & Klaus Ritzberger, 2011. "Strategic games beyond expected utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(2), pages 377-398, October.
    4. Ghirardato, Paolo & Le Breton, Michel, 2000. "Choquet Rationality," Journal of Economic Theory, Elsevier, vol. 90(2), pages 277-285, February.
    5. Joseph Greenberg, 2000. "The Right to Remain Silent," Theory and Decision, Springer, vol. 48(2), pages 193-204, March.
    6. Werlang, Sérgio Ribeiro da Costa, 2000. "A notion of subgame perfect Nash equilibrium under knightian uncertainty," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 376, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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