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Mutually acceptable courses of action

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Abstract

We offer a game-theoretic framework that enables the analysis of situations whereby rational individuals with different beliefs and views of the world agree to a shared course of action. We introduce a new solution concept: a mutually acceptable course of action, which can be viewed as an (incomplete) contract or a social norm that free rational individuals would be willing to follow for their own diverse reasons. We show that by varying the degree of completeness of the underlying course of action, our concept can be related to commonly used solutions, such as perfect equilibrium, perfect Bayesian equilibrium, (rationalizable) self-confirming equilibrium, and rationalizable outcomes.

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Authors and Affiliations

  1. Department of Economics, McGill University, Montreal, Canada, H3A 2T7

    Joseph Greenberg

  2. Simon Fraser University, Burnaby, BC, Canada, V5A 1S6

    Sudheer Gupta

  3. Department of Economics, National University of Singapore, Singapore, 117570, Singapore

    Xiao Luo

  4. Institute of Economics, Academia Sinica, Taipei, 115, Taiwan

    Xiao Luo

Authors
  1. Joseph Greenberg
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  2. Sudheer Gupta
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  3. Xiao Luo
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Corresponding author

Correspondence to Xiao Luo.

Additional information

We are grateful to the editor and an anonymous referee for very useful and helpful comments and suggestions. Earlier versions of this paper were circulated under the title “Towering over Babel: Worlds Apart but Acting Together”. We thank participants at the World Congress of Game Theory Society (2004), the International Conference on Game Theory (2004), the European Meeting (2004), and the Econometric Society World Congress (2005). Financial support from SSHRC and NSERC of Canada, and the National Science Council of Taiwan are gratefully acknowledged.

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Greenberg, J., Gupta, S. & Luo, X. Mutually acceptable courses of action. Econ Theory 40, 91–112 (2009). https://doi.org/10.1007/s00199-008-0349-5

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