Preference, Rationalizability and Equilibrium

Abstract In the context of finite normal form games, this paper addresses the formalization and implications of the hypothesis that players are rational and that this is common knowledge. The innovation is to admit notions of rationality other than subjective expected utility maximization. For example, rationality can be defined by the alternative restrictions that preferences are probabilistically sophisticated, conform to the multiple-priors model or are monotonic. The noted hypothesis is related to suitably defined notions of correlated rationalizability, survival of iterated deletion of strictly dominated strategies and a posteriori equilibrium. Journal of Economic Literature Classification Numbers: C72, D81.

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