Pairwise epistemic conditions for Nash equilibrium

C.W. Bach; E. Tsakas

doi:10.1016/j.geb.2014.01.017

Pairwise epistemic conditions for Nash equilibrium

C.W. Bach, E. Tsakas^*

^*Corresponding author for this work

Microeconomics & Public Economics

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

We introduce a framework for modeling pairwise interactive beliefs and provide an epistemic foundation for Nash equilibrium in terms of pairwise epistemic conditions locally imposed on only some pairs of players. Our main result considerably weakens not only the standard sufficient conditions by Aumann and Brandenburger (1995), but also the subsequent generalization by Barelli (2009). Surprisingly, our conditions do not require nor imply mutual belief in rationality.

Original language	English
Pages (from-to)	48-59
Number of pages	12
Journal	Games and Economic Behavior
Volume	85
DOIs	https://doi.org/10.1016/j.geb.2014.01.017
Publication status	Published - May 2014

Keywords

Nash equilibrium
Pairwise common belief
Pairwise mutual belief
Pairwise action-consistency
Rationality
Conjectures
Biconnected graph
Epistemic game theory
KNOWLEDGE

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10.1016/j.geb.2014.01.017

Cite this

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abstract = "We introduce a framework for modeling pairwise interactive beliefs and provide an epistemic foundation for Nash equilibrium in terms of pairwise epistemic conditions locally imposed on only some pairs of players. Our main result considerably weakens not only the standard sufficient conditions by Aumann and Brandenburger (1995), but also the subsequent generalization by Barelli (2009). Surprisingly, our conditions do not require nor imply mutual belief in rationality.",

keywords = "Nash equilibrium, Pairwise common belief, Pairwise mutual belief, Pairwise action-consistency, Rationality, Conjectures, Biconnected graph, Epistemic game theory, KNOWLEDGE",

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AU - Bach, C.W.

AU - Tsakas, E.

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AB - We introduce a framework for modeling pairwise interactive beliefs and provide an epistemic foundation for Nash equilibrium in terms of pairwise epistemic conditions locally imposed on only some pairs of players. Our main result considerably weakens not only the standard sufficient conditions by Aumann and Brandenburger (1995), but also the subsequent generalization by Barelli (2009). Surprisingly, our conditions do not require nor imply mutual belief in rationality.

KW - Nash equilibrium

KW - Pairwise common belief

KW - Pairwise mutual belief

KW - Pairwise action-consistency

KW - Rationality

KW - Conjectures

KW - Biconnected graph

KW - Epistemic game theory

KW - KNOWLEDGE

U2 - 10.1016/j.geb.2014.01.017

DO - 10.1016/j.geb.2014.01.017

M3 - Article

SN - 0899-8256

VL - 85

SP - 48

EP - 59

JO - Games and Economic Behavior

JF - Games and Economic Behavior

ER -