Existence of Valuation Equilibria When Equilibrium Strategies Cannot Differentiate between Equal Ties
9 Pages Posted: 15 Jun 2009 Last revised: 18 Mar 2011
Date Written: February 24, 2011
This paper reconsiders the valuation equilibrium concept (Jehiel and Samet, 2007) and proposes an additional regularity condition concerning the players' equilibrium strategies. The condition, which requires equilibrium strategies to induce the same local behaviour at all nodes with 'similar' optimal actions, increases both the predictive power and the internal consistency of the concept - especially when used as a tool to study boundedly rational behaviour in games with imperfect information and/or imperfect recall. It is shown not to conict with existence.
Keywords: bounded rationality, valuation equilibrium, existence, imperfect recall
JEL Classification: C72
Suggested Citation: Suggested Citation