Admissibility and Common Knowledge

G.B. Asheim, M. Dufwenberg

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Abstract

The implications of assuming that it is commonly known that players consider only admissible best responses are investigated.Within a states-of-the-world model where a state, for each player, determines a strategy set rather than a strategy the concept of fully permissible sets is defined.General existence is established, and a finite algorithm (eliminating strategy sets instead of strategies) is provided.The concept refines rationalizability as well as the Dekel-Fudenberg procedure, and captures a notion of forward induction.When players consider all best responses, the same framework can be used to define the concept of rationalizable sets, which characterizes rationalizability.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages26
Volume1996-16
Publication statusPublished - 1996

Publication series

NameCentER Discussion Paper
Volume1996-16

Keywords

  • game theory

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