Observable implications of Nash and subgame-perfect behavior in extensive games |
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Authors: | Indrajit Ray Susan Snyder |
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Institution: | 1. Department of Economics, University of Birmingham, Edgbaston, Birmingham B15 2TT, UK;2. Reports & Forecasts Division, Minnesota Department of Human Services, PO Box 64996, St. Paul, MN 55164-0996, USA |
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Abstract: | We provide necessary and sufficient conditions for observed outcomes in extensive game forms, in which preferences are unobserved, to be rationalized first, weakly, as a Nash equilibrium and then as the unique subgame-perfect equilibrium. Thus, one could use these conditions to find that play is (a) consistent with subgame-perfect equilibrium, or (b) not consistent with subgame-perfect behavior but is consistent with Nash equilibrium, or (c) consistent with neither. |
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Keywords: | Revealed preference Consistency Subgame-perfect equilibrium |
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