Iterated potential and robustness of equilibria
Journal article: For any given set-valued solution concept, it is possible to consider iterative elimination of actions outside the solution set. This paper applies such a procedure to define the concept of iterated monotone potential maximizer (iterated MP-maximizer). It is shown that under some monotonicity conditions, an iterated MP-maximizer is robust to incomplete information [A. Kajii, S. Morris, The robustness of equilibria to incomplete information, Econometrica 65 (1997) 1283-1309] and absorbing and globally accessible under perfect foresight dynamics for a small friction [A. Matsui, K. Matsuyama, An approach to equilibrium selection, J. Econ. Theory 65 (1995) 415-434]. Several simple sufficient conditions under which a game has an iterated MP-maximizer are also provided.
Author(s)
Daisuke Oyama, Olivier Tercieux
Journal
- Journal of Economic Theory
Date of publication
- 2009
Keywords JEL
Keywords
- Equilibrium selection
- Robustness
- Incomplete information
- Perfect foresight dynamics
- Iteration
- Monotone potential
- P-Dominance
Pages
- 1726-1769
URL of the HAL notice
Version
- 1
Volume
- 144