TY - JOUR
T1 - Rational behavior with payoff uncertainty
AU - Dekel, Eddie
AU - Fudenberg, Drew
N1 - Funding Information:
* This work was begun while the second author was at the kiniversity of California, Berkeley. We acknowledge many helpful conversations with Adam Bran&&urger and Matthew Rabin. Financial support from the Miller Institute and NSF grants SES 88-08133 and 88-08204 is gratefully acknowledged.
PY - 1990/12
Y1 - 1990/12
N2 - The iterated deletion of weakly dominated strategies has been advanced as a necessary requirement for "rational" play. However, this requirement relies on the assumption that the players have no doubts about their opponents' payoffs. We show that once such doubts are introduced, all that can be justified by an appeal to rationality is one round of deletion of weakly dominated strategies, followed by iterated deletion of strategies that are strongly dominated. This extends the Fudenberg, Kreps, and Levine (J. Econ. Theory 12 (1988), 354-380) study of the robustness of Nash equilibrium refinements to the robustness of solution concepts based only on rationality. Our results also clarify the relationship between various notions of what it means for payoff uncertainty to be "small.".
AB - The iterated deletion of weakly dominated strategies has been advanced as a necessary requirement for "rational" play. However, this requirement relies on the assumption that the players have no doubts about their opponents' payoffs. We show that once such doubts are introduced, all that can be justified by an appeal to rationality is one round of deletion of weakly dominated strategies, followed by iterated deletion of strategies that are strongly dominated. This extends the Fudenberg, Kreps, and Levine (J. Econ. Theory 12 (1988), 354-380) study of the robustness of Nash equilibrium refinements to the robustness of solution concepts based only on rationality. Our results also clarify the relationship between various notions of what it means for payoff uncertainty to be "small.".
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U2 - 10.1016/0022-0531(90)90033-G
DO - 10.1016/0022-0531(90)90033-G
M3 - Article
AN - SCOPUS:38249016662
SN - 0022-0531
VL - 52
SP - 243
EP - 267
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 2
ER -