The Cutting Power of Preparation

CentER Discussion Paper Series No. 2005-94

26 Pages Posted: 20 Oct 2005

See all articles by Olivier Tercieux

Olivier Tercieux

Paris-Jourdan Sciences Economiques (PSE)

Mark Voorneveld

Stockholm School of Economics - Department of Economics

Date Written: August 2005

Abstract

In a strategic game, a curb set [Basu and Weibull, Econ.Letters 36 (1991) 141-146] is a product set of pure strategies containing all best responses to every possible belief restricted to this set.Prep sets [Voorneveld, Games Econ. Behav. 48 (2004) 403-414] relax this condition by only requiring the presence of at least one best response to such a belief.The purpose of this paper is to provide sufficient conditions under which minimal prep sets give sharp predictions.These conditions are satisfied in many economically relevant classes of games, including supermodular games, potential games, and congestion games with player-specific payoffs.In these classes, minimal curb sets generically have a large cutting power as well, although it is shown that there are relevant subclasses of coordination games and congestion games where minimal curb sets have no cutting power at all and simply consist of the entire strategy space.

Keywords: curb sets, prep sets, supermodular games, potential games, congestion games

JEL Classification: C72

Suggested Citation

Tercieux, Olivier and Voorneveld, Mark, The Cutting Power of Preparation (August 2005). CentER Discussion Paper Series No. 2005-94, Available at SSRN: https://ssrn.com/abstract=800431 or http://dx.doi.org/10.2139/ssrn.800431

Olivier Tercieux

Paris-Jourdan Sciences Economiques (PSE) ( email )

48, BD Jourdan
75014 Paris
France

Mark Voorneveld (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden

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