Stability, sequential rationality, and subgame consistency (Q2464019)

The main aim of this research work is the study of dynamic strategic behavior for extensive games with perfect information.The authors present a novel set-valued solution concept, called the sequentially stable equilibrium, that satisfies the subgame consistency, together with its strong appropriate refinement, by introducing an alternative dominance relation based on a stringent principle of sequential rationality. The largest stable set that yields exactly all the backward induction outcomes characterizes all sequentially stable equilibria. Significant references complete the paper.