On perfect Nash equilibria of polymatrix games (Q457873)

Summary: When confronted with multiple Nash equilibria, decision makers have to refine their choices. Among all known Nash equilibrium refinements, the perfectness concept is probably the most famous one. It is known that weakly dominated strategies of two-player games cannot be part of a perfect equilibrium. In general, this undominance property however does not extend to \(n\)-player games [\textit{E. van Damme}, Refinements of the Nash equilibrium concept. Lect. Notes Econ. Math. Syst. 219. Berlin etc.: Springer-Verlag (1983; Zbl 0523.90095)]. In this paper we show that polymatrix games, which form a particular class of \(n\)-player games, verify the undominance property. Consequently, we prove that every perfect equilibrium of a polymatrix game is undominated and that every undominated equilibrium of a polymatrix game is perfect. This result is used to set a new characterization of perfect Nash equilibria for polymatrix games. We also prove that the set of perfect Nash equilibria of a polymatrix game is a finite union of convex polytopes. In addition, we introduce a linear programming formulation to identify perfect equilibria for polymatrix games. These results are illustrated on two small game applications. Computational experiments on randomly generated polymatrix games with different size and density are provided.