A Strategic Foundation for Proper Equilibrium
CentER Discussion Paper Series No. 2012-093
15 Pages Posted: 23 Nov 2012
Date Written: November 21, 2012
Abstract
Proper equilibrium plays a prominent role in the literature on non-cooperative games. The underlying thought experiment is, however, unsatisfying, as it gives no justification for its fundamental idea that severe mistakes are made with a significantly smaller probability than innocuous ones. In this paper we provide a justification for this idea based on strategic choices of players. In this way we provide a strategic foundation for proper equilibrium.
Keywords: proper equilibrium, fall back proper equilibrium
JEL Classification: C72
Suggested Citation: Suggested Citation
Kleppe, John and Borm, Peter E. M. and Hendrickx, Ruud, A Strategic Foundation for Proper Equilibrium (November 21, 2012). CentER Discussion Paper Series No. 2012-093, Available at SSRN: https://ssrn.com/abstract=2179002 or http://dx.doi.org/10.2139/ssrn.2179002
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