Thursday, October 18, 2018 at 11:40am to 1:10pm
Ives Hall, 111
B07 Tower Rd, Ithaca, NY 14853, USA
Jörgen W. Weibull - Stockholm School of Economics
“Game Theory and Social Norms: Population Play and Settled Equilibria in the Normal and Extensive Forms”
Talk based on the article Tenable Strategy Blocks and Settled Equilibria (Joint with Roger Myerson)
Abstract: When people interact in familiar settings, social conventions usually develop so that people tend to disregard alternatives outside the convention. For rational players to usually restrict attention to a block of conventional strategies, no player should prefer to deviate from the block when others are likely to act conventionally and rationally inside the block. We explore two set-valued concepts, coarsely and finely tenable blocks, that formalize this notion for finite normal-form games. We then identify settled equilibria, which are Nash equilibria with support in minimal tenable blocks. For a generic class of normal-form games, our coarse and fine concepts are equivalent, and yet they differ from standard solution concepts on open sets of games. We demonstrate the nature and power of the solutions by way of examples. Settled equilibria are closely related to persistent equilibria but are strictly more selective on an open set of games. With fine tenability, we obtain invariance under the insertion of a subgame with a unique totally mixed payoff-equivalent equilibrium, a property that other related concepts have not satisfied.
*Co-sponsored with CRADLE (Cornell Research Academy of Development, Law and Economics)