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Refinements of Nash Equilibrium

Srihari Govindan
University of Iowa

Robert Wilson
Stanford Graduate School of Business

July 2005

Abstract:
This paper describes ways that the definition of an equilibrium among players' strategies in a game can be sharpened by invoking additional criteria derived from decision theory. Refinements of John Nash's 1950 definition aim primarily to distinguish equilibria in which implicit commitments are credible due to incentives. One group of refinements requires sequential rationality as the game progresses. Another ensures credibility by considering perturbed games in which every contingency occurs with positive probability, which has the further advantage of excluding weakly dominated strategies.

Keywords: economic theory

JEL Classifications: C72

Working Paper Series

Date posted: August 10, 2005 ; Last revised: August 11, 2005

Suggested Citation

Govindan, Srihari and Wilson, Robert B., Refinements of Nash Equilibrium (July 2005). Available at SSRN: http://ssrn.com/abstract=772081

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Contact Information

Robert B. Wilson (Contact Author) Stanford Graduate School of Business ( email ) 518 Memorial Way Stanford, CA 94305-5015 United States 650-723-8620 (Phone) 650-725-7979 (Fax)
Srihari Govindan University of Iowa ( email ) Iowa City, IA 52242 United States