Axiomatic Theory of Equilibrium in Signaling Games with Generic Payoffs
33 Pages Posted: 22 Oct 2008
Date Written: September 1, 2008
Three axioms from decision theory select sets of Nash equilibria of signaling games in extensive form with generic payoffs. The axioms require undominated strategies (admissibility), inclusion of a sequential equilibrium (backward induction), and dependence only on the game's normal form even when embedded in a larger game with redundant strategies or irrelevant players(small worlds). The axioms are satisfied by a set that is stable (Mertens, 1989) and conversely the axioms imply that each selected set is stable and thus an essential component of admissible equilibria with the same outcome.
Suggested Citation: Suggested Citation
Govindan, Srihari and Wilson, Robert B., Axiomatic Theory of Equilibrium in Signaling Games with Generic Payoffs (September 1, 2008). Stanford University Graduate School of Business Research Paper No. 2000, Available at SSRN: https://ssrn.com/abstract=1287385 or http://dx.doi.org/10.2139/ssrn.1287385
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