Abstract
In this paper, we show that, in the class of games where each player’s strategy space is compact Hausdorff and each player’s payoff function is continuous and “concave-like,” rationalizability in a variety of general preference models yields the unique set of outcomes of iterated strict dominance. The result implies that rationalizable strategic behavior in these preference models is observationally indistinguishable from that in the subjective expected utility model, in this class of games. Our indistinguishability result can be applied not only to mixed extensions of finite games, but also to other important applications in economics, for example, the Cournot–oligopoly model.
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We are grateful to the editor and an anonymous referee for very useful and helpful comments and suggestions. This paper is based on part of our earlier manuscript entitled “A Unified Approach to Information, Knowledge, and Stability.” We thank Tai-Wei Hu, Takashi Kunimoto, Chenghu Ma, Ichiro Obara, Satoru Takahashi, Tan Wang, Licun Xue, Shmuel Zamir, and Yongchao Zhang for helpful discussions and comments. We also thank Professor Larry Epstein for his encouragement. This paper was presented at the 10th SAET Conference in Singapore and the 2010 Canadian Economic Theory Conference in Montreal. Financial support from National University of Singapore is gratefully acknowledged. The usual disclaimer applies.
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Chen, YC., Luo, X. An indistinguishability result on rationalizability under general preferences. Econ Theory 51, 1–12 (2012). https://doi.org/10.1007/s00199-010-0596-0
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DOI: https://doi.org/10.1007/s00199-010-0596-0