Iterated potential and robustness of equilibria
For any given set-valued solution concept, it is possible to consider iterative elimination of actions outside the solution set. This paper applies such a procedure to define the concept of iterated monotone potential maximizer (iterated MP-maximizer). It is shown that under some monotonicity conditions, an iterated MP-maximizer is robust to incomplete information [A. Kajii, S. Morris, The robustness of equilibria to incomplete information, Econometrica 65 (1997) 1283-1309] and absorbing and globally accessible under perfect foresight dynamics for a small friction [A. Matsui, K. Matsuyama, An approach to equilibrium selection, J. Econ. Theory 65 (1995) 415-434]. Several simple sufficient conditions under which a game has an iterated MP-maximizer are also provided.
Year of publication: |
2009
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Authors: | Oyama, Daisuke ; Tercieux, Olivier |
Published in: |
Journal of Economic Theory. - Elsevier, ISSN 0022-0531. - Vol. 144.2009, 4, p. 1726-1769
|
Publisher: |
Elsevier |
Keywords: | Equilibrium selection Robustness Incomplete information Perfect foresight dynamics Iteration Monotone potential p-Dominance |
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