Epistemic conditions for nash equilibrium

Robert Aumann, Adam Brandenburger

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

Sufficient conditions for Nash equilibrium in an n-person game are given in terms of what the players know and believe-about the game, and about each other's rationality, actions, knowledge, and beliefs. Mixed strategies are treated not as conscious randomizations, but as conjectures, on the part of other players, as to what a player will do. Common knowledge plays a smaller role in characterizing Nash equilibrium than had been supposed. When n = 2, mutual knowledge of the payoff functions, of rationality, and of the conjectures implies that the conjectures form a Nash equilibrium. When n ≥ 3 and there is a common prior, mutual knowledge of the payoff functions and of rationality, and common knowledge of the conjectures, imply that the conjectures form a Nash equilibrium. Examples show the results to be tight.

Original languageEnglish
Title of host publicationWorld Scientific Series in Economic Theory
EditorsAdam Brandenburger
PublisherWorld Scientific
Pages113-136
Number of pages24
DOIs
StatePublished - 1 Sep 2023

Publication series

NameWorld Scientific Series in Economic Theory
Volume5
ISSN (Print)2251-2071

Bibliographical note

Publisher Copyright:
© 2014 World Scientific Publishing Co. Pte. Ltd.

Keywords

  • belief
  • belief systems
  • common knowledge
  • common prior
  • conjectures
  • epistemic conditions
  • equilibrium
  • Game theory
  • interactive belief systems
  • knowledge
  • mixed strategies
  • mutual knowledge
  • Nash equilibrium
  • rationality
  • strategic equilibrium
  • strategic games

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