Algorithms for cautious reasoning in games*

Geir B. Asheim & Andrés Perea

Memo 10/2017

Abstract

We provide comparable algorithms for the Dekel-Fudenberg procedure, iterated admissibility, proper rationalizability and full permissibility by means of the concepts of preference restrictions and likelihood orderings. We apply the algorithms for comparing iterated admissibility, proper rationalizability and full permissibility, and provide a sufficient condition under which iterated admissibility does not rule out properly rationalizable strategies. Finally, we use the algorithms to examine an economically relevant strategic situation, namely a bilateral commitment bargaining game.

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Published Oct. 18, 2017 2:47 PM - Last modified Oct. 18, 2017 2:47 PM