A new epistemic characterization of ε-proper rationalizability

B-Tier
Journal: Games and Economic Behavior
Year: 2017
Volume: 104
Issue: C
Pages: 309-328

Authors (2)

Perea, Andrés (not in RePEc) Roy, Souvik (Indian Statistical Institute)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

For a given ε>0, the concept of ε-proper rationalizability (Schuhmacher, 1999) is based on two assumptions: (1) every player is cautious, i.e., does not exclude any opponent's choice from consideration, and (2) every player satisfies the ε-proper trembling condition, i.e., the probability he assigns to an opponent's choice a is at most ε times the probability he assigns to b whenever he believes the opponent to prefer b to a. In this paper we show that a belief hierarchy is ε-properly rationalizable in the complete information framework, if and only if, there is an equivalent belief hierarchy within the incomplete information framework that expresses common belief in the events that (1) players are cautious, (2) the players' beliefs about the opponent's utilities are “centered around the original utilities” in some specific way parametrized by ε, and (3) players rationalize each opponent's choice by a utility function that is as close as possible to the original utility function.

Technical Details

RePEc Handle
repec:eee:gamebe:v:104:y:2017:i:c:p:309-328
Journal Field
Theory
Author Count
2
Added to Database
2026-01-29