Robustness to strategic uncertainty |
| |
| Institution: | 1. Research Institute of Industrial Economics (IFN), Sweden;2. CentER & TILEC, Tilburg University, Netherlands;3. Stockholm School of Economics, Sweden;4. Institute for Advanced Study in Toulouse, France;5. KTH Royal Institute of Technology, Stockholm, Sweden;1. Decision Sciences and MIS, LeBow College of Business, Drexel University, Philadelphia, PA 19104, United States;2. RUTCOR (Center for Operations Research), Rutgers University, Piscataway, NJ 08854, United States;1. Yale University, 30 Hillhouse Ave., New Haven, CT 06520, USA;2. National University of Singapore, Singapore 117570, Singapore;3. HEC Paris, 78351 Jouy-en-Josas, France;1. Universitat de les Illes Balears and CREB, Spain;2. Universitat de les Illes Balears, Spain |
| |
| Abstract: | We introduce a criterion for robustness to strategic uncertainty in games with continuum strategy sets. We model a player's uncertainty about another player's strategy as an atomless probability distribution over that player's strategy set. We call a strategy profile robust to strategic uncertainty if it is the limit, as uncertainty vanishes, of some sequence of strategy profiles in which every player's strategy is optimal under his or her uncertainty about the others. When payoff functions are continuous we show that our criterion is a refinement of Nash equilibrium and we also give sufficient conditions for existence of a robust strategy profile. In addition, we apply the criterion to Bertrand games with convex costs, a class of games with discontinuous payoff functions and a continuum of Nash equilibria. We show that it then selects a unique Nash equilibrium, in agreement with some recent experimental findings. |
| |
| Keywords: | Nash equilibrium Refinement Strategic uncertainty Bertrand competition Log-concavity |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
