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SEQUENTIAL TWO‐PLAYER GAMES WITH AMBIGUITY*
Author(s) -
Eichberger Jürgen,
Kelsey David
Publication year - 2004
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.0020-6598.2004.00304.x
Subject(s) - ambiguity , mathematical economics , sequential equilibrium , nash equilibrium , context (archaeology) , limit (mathematics) , epsilon equilibrium , path (computing) , bayesian game , bayesian probability , best response , equilibrium selection , computer science , mathematics , game theory , repeated game , artificial intelligence , paleontology , mathematical analysis , biology , programming language
If players' beliefs are strictly nonadditive, the Dempster–Shafer updating rule can be used to define beliefs off the equilibrium path. We define an equilibrium concept in sequential two‐person games where players update their beliefs with the Dempster–Shafer updating rule. We show that in the limit as uncertainty tends to zero, our equilibrium approximates Bayesian Nash equilibrium. We argue that our equilibrium can be used to define a refinement of Bayesian Nash equilibrium by imposing context‐dependent constraints on beliefs under uncertainty.