07.SimultaneousMove3

07.SimultaneousMove3 - RATIONALIZABILITY (yet another...

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RATIONALIZABILITY (yet another solution concept for strategic games…) Idea: It makes sense to assume that rational players believe that their opponents never play a strategy THAT IS NEVER A BEST RESPONSE. A strategy s is never a best response for player “i” if, for each pure strategy of the other player(s) , Player “i” has an alternative strategy that yields her a larger payoff than strategy s . Player 2 Player 1 L R Up 0 , 2 2 , 0 Middle 2 , 0 0 , 4 Down 1 , 5 1 , 2 Player 1’s strategy “Down” is never a best response: If #2 plays “L” the best response is “Middle” whereas if #2 plays “R” the best response is “Up.” Player 2 Player 1 L R Up 0 , 2 2 , 0 Middle 2 , 0 0 , 4 This is the game remaining if we eliminate Player 1’s strategy “Down.” In this remaining game, all strategies of the players can be best responses. We say that {Up, middle} are rationalizable strategies of player 1, and {L,R} are rationalizable strategies of player 2.
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This note was uploaded on 03/16/2012 for the course FENS 101 taught by Professor Selçukerdem during the Fall '12 term at Sabancı University.

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07.SimultaneousMove3 - RATIONALIZABILITY (yet another...

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