Iterated strict dominance in general games |
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| Institution: | 1. Department of Economics, Northwestern University, Evanston, IL 60208, USA;2. Department of Economics, McGill University, Montreal H3A 2T7, Canada;3. Institute of Economics, Academia Sinica, Taipei 115, Taiwan, ROC;1. School of Economics, University of New South Wales, Australia;2. Department of Economics, National University of Singapore, Singapore;1. Data61 and UNSW, Australia;2. TU München, Germany;3. TU Berlin, Germany;1. Departments of Economics and Political Science, Columbia University, 420 West 118th Street, New York, NY 10027, United States of America;2. NBER, United States of America;3. CEPR, United Kingdom;4. Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, CA 91125, United States of America |
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| Abstract: | We offer a definition of iterated elimination of strictly dominated strategies (IESDS*) for games with (in)finite players, (non)compact strategy sets, and (dis)continuous payoff functions. IESDS* is always a well-defined order independent procedure that can be used to solve Nash equilibrium in dominance-solvable games. We characterize IESDS* by means of a “stability” criterion, and offer a sufficient and necessary epistemic condition for IESDS*. We show by an example that IESDS* may generate spurious Nash equilibria in the class of Reny's better-reply secure games. We provide sufficient/necessary conditions under which IESDS* preserves the set of Nash equilibria. |
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