
Tenable threats when Nash equilibrium is the norm
Sakovics, J.; Forges, Françoise (2021), Tenable threats when Nash equilibrium is the norm. https://basepub.dauphine.psl.eu/handle/123456789/22455
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Type
Document de travail / Working paperDate
2021Éditeur
University of Edimburg
Titre de la collection
Edinburgh School of Economics Discussion Paper SeriesNuméro dans la collection
301Ville d’édition
Edimburg
Pages
21
Métadonnées
Afficher la notice complèteAuteur(s)
Sakovics, J.Forges, Françoise
CEntre de REcherches en MAthématiques de la DEcision [CEREMADE]
Laboratoire d'Economie de Dauphine [LEDa]
Résumé (EN)
We formally assume that players in a game consider Nash Equilibrium (NE) thebehavioral norm. In önite games of perfect information this leads to a reönementof NE: Faithful Nash Equilibrium (FNE). FNE is outcome equivalent to NE of theìtrimmedî game, obtained by restricting the original tree to its NE paths. Thus,it always exists but it need not be unique. Iterating the norm ensures uniquenessof outcome. FNE may violate backward induction when subgame perfection requires play according to the SPE following a deviation from it. We thus provide analternative view of tenable threats in equilibrium analysis.Mots-clés
Nash Equilibrium; threatJEL
D91 - Intertemporal Household Choice; Life Cycle Models and SavingD83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
D01 - Microeconomic Behavior: Underlying Principles
C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
C72 - Noncooperative Games
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