We modify the epistemic conditions for Nash equilibrium only to accommodate Gilboa and Schmeidler's [Journal of Mathematical Economics, 18 (1989), 141–153] maxmin expected utility preferences, and identify the equilibrium concept in n-player strategic games that characterizes the modified epistemic conditions. The epistemic characterization supports the… (More)
This paper provides a recipe to generate definitions of possibility, which is equivalent to the standard approach of deriving possibility from belief/knowledge. Savage's notion of nonnullity is therefore an example that fits into our framework. The recipe is used to create a new definition of possibility, which is logically coherent for all weakly monotonic… (More)
We consider a strategic situation in which each player may not know the probability distribution governing the information structures of his opponents, and consequently his beliefs about opponents' action choices are represented by a set of probability measures. Suppose that beliefs of all the players are common knowledge. Then for any subset of players,… (More)
Firms' financial data vary considerably with the size of their operations. Such scale differences potentially confound several types of inferences, of which this paper analyzes three. This paper evaluates two potential solutions to these inference problems suggested by theory: (i) deflating the data by a proxy for scale; and (ii) including a scale proxy as… (More)
Firm leverage has been documented to be a slow-moving, persistent variable, even after controlling for leverage determinants. I show that if a firm's leverage dynamics are driven by a persistent explanatory variable that is measured with error, the mismeasured explanatory variable creates leverage persistence in a Lemmon et al. portfolio sort framework. In… (More)
We generalize permissibility (Brandenburger, 1992) to allow for any suitably defined model of preference and definition of possibility. We also prove that the generalized solution concept characterizes rationality, caution, and common " belief " of rationality and caution.