Abstract
We introduce the idea that a player believes at every stage of a dynamic game that his opponents will choose rationally in the future and have chosen rationally in a restricted way in the past. This is summarized by the concept of common belief in future and restricted past rationality, which is defined epistemically. Moreover, it is shown that every properly rationalizable strategy of the normal form of a dynamic game can be chosen in the dynamic game under common belief in future and restricted past rationality. We also present an algorithm that uses strict dominance, and show that it selects exactly those strategies that can be chosen under common belief in future and restricted past rationality.
Original language | English |
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Pages (from-to) | 711-747 |
Number of pages | 37 |
Journal | International Journal of Game Theory |
Volume | 49 |
Issue number | 3 |
Early online date | 10 Mar 2020 |
DOIs | |
Publication status | Published - Sept 2020 |
JEL classifications
- c72 - Noncooperative Games
- c73 - "Stochastic and Dynamic Games; Evolutionary Games; Repeated Games"
Keywords
- Epistemic game theory
- Dynamic games
- Proper rationalizability
- Belief in future rationality
- Belief in restricted past rationality
- PROPER RATIONALIZABILITY
- BEHAVIOR