How Proper Is Sequential Equilibrium? |
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| Authors: | George J Mailath Larry Samuelson Jeroen M Swinkels |
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| Affiliation: | aDepartment of Economics, University of Pennsylvania, 3718 Locust Walk, Philadelphia, Pennsylvania, 19104-6297;bDepartment of Economics, University of Wisconsin, 1180 Observatory Drive, Madison, Wisconsin, 53706;cKellogg Graduate School of Management, Northwestern University, 2001 Sheridan Road, Evanston, Illinois, 60208-2009 |
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| Abstract: | A strategy profile of a normal form game is proper if and only if it is quasi-perfect in every extensive form (with that normal form). Thus, properness requires optimality along a sequence of supporting trembles, while sequentiality only requires optimality in the limit. A decision-theoretic implementation of sequential rationality, strategic independence respecting equilibrium (SIRE), is defined and compared to proper equilibrium, using lexicographic probability systems. Finally, we give tremble-based characterizations, which do not involve structural features of the game, of the rankings of strategies that underlie proper equilibrium and SIRE.Journal of Economic LiteratureClassification Numbers: C70, C72. |
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