Abstract

  


 



Regret Equilibria in Games


E.J.R. Droste


Tilburg University, CentER

Michael Kosfeld


Faculty of Economics and Business Administration; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Mark Voorneveld


Stockholm School of Economics - Department of Economics
1998

CentER Discussion Paper Series No. 1998-19

Abstract:     
We study boundedly rational players in an interactive situation. Each player follows a simple choice procedure in which he reacts optimally against a combination of actions of his opponents drawn at random from the distribution generated by a player's beliefs. By imposing a consistency requirement we obtain an equilibrium notion which we call regret equilibrium. An existence proof is provided and it is shown that the concept survives the iterated elimination of never-best responses. Additional properties are studied and the regret equilibrium concept is compared with other game theoretic solution concepts. The regret equilibrium concept is illustrated by means of interesting examples. It is shown that in the centipede game, players will continue to play with large probability.

JEL Classification: C72

working papers series


Date posted: December 2, 1998  

Suggested Citation

Droste, E.J.R. J.R., Kosfeld, Michael and Voorneveld, Mark, Regret Equilibria in Games (1998). CentER Discussion Paper Series No. 1998-19. Available at SSRN: http://ssrn.com/abstract=137982

Contact Information

Edward J.R. Droste
Tilburg University, CentER ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2324 (Phone)
+31 13 466 3072 (Fax)
Michael Kosfeld
Faculty of Economics and Business Administration ( email )
Grueneburgplatz 1
Frankfurt am Main, 60323
Germany
Institute for the Study of Labor (IZA)
Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute for Economic Research) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
Mark Voorneveld (Contact Author)
Stockholm School of Economics - Department of Economics ( email )
P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
Feedback to SSRN (Beta)


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