On the Inconsistency of Equilibrium Refinement |
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Authors: | Güth Werner |
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Institution: | (1) Strategic Interaction Group, Max Planck Institute for Research into Economic Systems, Kahlaische Str. 10, 07745 Jena, Germany |
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Abstract: | Consistency and optimality together with converse consistency provide an illuminating and novel characterization of the equilibrium concept (Peleg and Tijs, 1996). But (together with non-emptiness) they preclude refinements of the equilibrium notion and selection of a unique equilibrium (Norde et al., 1996). We suggest two escape routes: By generalizing the concept of strict equilibrium we question the practical relevance of the existence requirement for refinements. To allow for equilibrium selection we suggest more complex reduced games which capture the inclinations of ``players who already left'. |
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