The Bayesian foundations of solution concepts of games (Q1108208): Difference between revisions

We transform a noncooperative game into a Bayesian decision problem for each player where the uncertainty faced by a player is the strategy choices of the other players, the priors of other players on the choice of other players, the priors over priors, and so on. We provide a complete characterization between the extent of knowledge about the rationality of players and their ability to successively eliminate strategies which are not best responses. This paper therefore provides the informational foundations of iteratively undominated strategies and rationalizable strategic behavior [see \textit{B. D. Bernheim}, Econometrica 52, 1007-1028 (1984; Zbl 0552.90098); \textit{D. G. Pearce}, Econometrica 52, 1029-1050 (1984; Zbl 0552.90097)]. Sufficient conditions are also found for Nash equilibrium behavior and a result akin to \textit{R. J. Aumann} [Econometrica 55, 1-18 (1987; Zbl 0633.90094)], on correlated equilibria, is derived with different hypotheses.