HO12F10 - GAME THEORY IN THE SOCIAL SCIENCES Political...

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G AME T HEORY IN THE S OCIAL S CIENCES Political Science 135/Economics 110 Hand out on: The Intuitive Criterion The Intuitive Criterion is a way of throwing out implausible Perfect Bayesian equilibria of signaling games. If an equilibrium fails to pass this criterion we will disregard it as a prediction about how the signaling game will be played. The parallel here is with Nash equilibria and subgame perfect equilibria. As we have seen, some Nash equilibria were not plausible predictions about the way a game would be played, and we disregarded them if these Nash equilibria were not subgame perfect. In the same spirit, we will disregard perfect Bayesian equilibria if they do not also pass the Intuitive Criterion. Whether or not an equilibrium passess the intuitive criterions is at issue only in pooling equilibria of a signaling game. Suppose every type pools in an equilibrium by taking the same action A 1 (e.g. “not going to college” in the Spence signaling model) and no one takes action
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