Abstract
Strategic errors may occur because of player trembles or because of noise in the communication channels. Suppose that the probability distribution of potential errors can be influenced at a cost γ proportional to the entropy reduction. This modified strategic-form game involves the choice of a probability distribution over strategies and a probability distribution over potential errors with weight ε on the latter. Each modified game has a Nash Equilibrium (NE), and any limit as ε → 0 is called an “γ-entropic equilibrium”, γ-entropic equilibria always exist and constitute a subset of trembling-hand-perfect equilibria, but otherwise γ-EE are independent of other refinements such as Proper NE.
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The author is grateful to Larry Samuelson and an anonymous referee for helpful comments, but retains sole responsibility for any error.
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Stahl, D.O. Entropy control costs and entropic equilibria. Int J Game Theory 19, 129–138 (1990). https://doi.org/10.1007/BF01761072
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DOI: https://doi.org/10.1007/BF01761072