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Plausible Equilibria and Backward Payoff-Keeping Behavior

  • Yuhki HosoyaEmail author
Chapter
Part of the Advances in Mathematical Economics book series (MATHECON, volume 22)

Abstract

This paper addresses Selten’s chain store paradox. We view this paradox as the phenomenon whereby the subgame perfect equilibria (SPEs) of some games are not credible. To solve this problem, we construct a refinement of Nash equilibria (NEs) called plausible equilibria. If an NE is included in this refinement, then the chain store paradox phenomenon does not occur and this equilibrium is credible. This paper analyzes the properties of this refinement and presents two results. First, every SPE of a zero-sum game with perfect information is plausible. Second, the notion of plausibility removes a bad equilibrium of the coordination game.

Keywords

Chain store paradox Plausible equilibria Maximin criteria Backward payoff-keeping behavior Degree of implausibility 

Notes

Acknowledgements

We are grateful to Toshiyuki Komiya, Mikio Nakayama, Eishiro Takeda, Masayuki Yao, and an anonymous reviewer for their worthwhile comments and suggestions.

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Copyright information

© Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  1. 1.Department of EconomicsKanto-Gakuin UniversityFuchu-shi, TokyoJapan

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