Prudent Rationalizability in Generalized Extensive-Form Games with Unawareness

Aviad Heifetz, Martin Meier, Burkhard Schipper

Research output: Contribution to journalArticle

Abstract

We define a cautious version of extensive-form rationalizability for generalized extensive-form games with unawareness that we call prudent rationalizability. It is an extensive-form analogue of iterated admissibility. In each round of the procedure, for each tree and each information set of a player a surviving strategy of hers is required to be rational vis-a-vis a belief system with a full-support belief on the opponents' previously surviving strategies that reach that information set. We demonstrate the applicability of prudent rationalizability.
In games of disclosure of verifiable information, we show that prudent rationalizability yields unraveling under full awareness but unraveling might fail under unawareness. We compare prudent rationalizability to extensive-form rationalizability. We show that prudent rationalizability may not refine extensive-form rationalizability strategies but conjecture
that the paths induced by prudent rationalizable strategy profiles (weakly) refine the set of paths induced by extensive-form rationalizable strategies.
Original languageEnglish
JournalThe B.E. Journal of Theoretical Economics
Early online date19 May 2020
DOIs
Publication statusE-pub ahead of print - 19 May 2020

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