Refinements of Nash Equilibrium

21 Pages Posted: 10 Aug 2005

See all articles by Srihari Govindan

Srihari Govindan

University of Rochester

Robert Wilson

Stanford Graduate School of Business

Date Written: 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 Classification: C72

Suggested Citation

Govindan, Srihari and Wilson, Robert B., Refinements of Nash Equilibrium (July 2005). Available at SSRN: https://ssrn.com/abstract=772081 or http://dx.doi.org/10.2139/ssrn.772081

Srihari Govindan

University of Rochester ( email )

Department of Economics
Rochester, NY NY 14627
United States
5852757214 (Phone)

Robert B. Wilson (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-8620 (Phone)
650-725-7979 (Fax)

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