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This paper proposes the solution concept of interim correlated rationalizability, and shows that all types that have the same hierarchies of beliefs have the same set of interim-correlated-rationalizable outcomes. This solution concept characterizes common certainty of rationality in the universal type space.
We show that a very broad class of models, including possibility correspondences, necessarily fail to capture very simple and intuitive implications of unawareness. We explain why standard state–space formulations suffer from this problem, illustrating the point with an example of a nonstandard state–space model which avoids the difficulty.
We extend Kreps’ (1979) analysis of preference for flexibility, reinterpreted by Kreps (1992) as a model of unforeseen contingencies. We enrich the choice set, consequently obtaining uniqueness results that were not possible in Kreps’ model. We consider several representations and allow the agent to prefer commitment in some contingencies. In the(More)
We provide a critical assessment of the ambiguity aversion literature, which we characterize in terms of the view that Ellsberg choices are rational responses to ambiguity, to be explained by relaxing Savage’s sure thing principle and adding an ambiguity-aversion postulate. First, admitting Ellsberg choices as rational leads to behavior, such as sensitivity(More)
This paper discusses the implications of learning theory for the analysis of games with a move by Nature. One goal is to illuminate the issues that arise when modeling situations where players are learning about the distribution of Nature’s move as well as learning about the opponents’ strategies. A second goal is to argue that quite restrictive assumptions(More)
This paper o®ers a new equilibrium concept for ̄nite normal form games motivated by the idea that players may have preferences which display uncertainty aversion. More speci ̄cally, it adopts the representation of preferences presented in Gilboa and Schmeidler (1989). Then an equilibrium with uncertainty aversion is de ̄ned and applied to a number of(More)
We de…ne and analyze a "strategic topology" on types in the Harsanyi-MertensZamir universal type space, where two types are close if their strategic behavior is similar in all strategic situations. For a …xed game and action de…ne the distance between a pair of types as the di¤erence between the smallest " for which the action is " interim correlated(More)
We study which preferences are stable using the “indirect evolutionary approach.” Individuals are randomly matched to play a two-person game. Individual (subjective) preferences determine their behavior, and may differ from the actual (objective) payoffs that determine fitness. Matched individuals may observe the opponents’ preferences perfectly, not at(More)
Dekel, Lipman and Rustichini (2001) (henceforth DLR) axiomatically characterized three representations of preferences that allow for a desire for flexibility and/or commitment. In one of these representations (ordinal expected utility), the independence axiom is stated in a weaker form than is necessary to obtain the representation; in another (additive(More)