A Strategic Foundation for Proper Equilibrium

CentER Discussion Paper Series No. 2012-093

15 Pages Posted: 23 Nov 2012

See all articles by John Kleppe

John Kleppe

Tilburg University - Tilburg University School of Economics and Management

Peter Borm

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Econometrics & Operations Research

Ruud Hendrickx

Tilburg University - Center for Economic Research (CentER)

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

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

John Kleppe (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Peter E. M. Borm

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Department of Econometrics & Operations Research

Tilburg, 5000 LE
Netherlands

Ruud Hendrickx

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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