Dynamic Unawareness and Rationalizable Behavior
Open University of Israel - Department of Economics and Management
Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)
Burkhard C. Schipper
University of California, Davis - Department of Economics
October 29, 2009
We define generalized extensive-form games which allow for mutual unawareness of actions. We extend Pearce's (1984) notion of extensive-form (correlated) rationalizability to this setting, explore its properties and prove existence. We define also a new variant of this solution concept, prudent rationalizability, which refines the set of outcomes induced by extensive-form rationalizable strategies. We apply prudent rationalizability to the analysis of verifiable communication with unawareness. Finally, we define the normal form of a generalized extensive-form game, and characterize in it extensive-form rationalizability by iterative conditional dominance.
Number of Pages in PDF File: 57
Keywords: Unawareness, extensive-form games, extensive-form rationalizability, prudent rationalizability, iterative conditional dominance
JEL Classification: C70, C72, D80, D82working papers series
Date posted: May 6, 2009 ; Last revised: February 22, 2010
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