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|Title:||Refinements of Nash equilibrium in potential games |
McLean, Richard P.
|Issue Date:||2011 |
|Series/Report no.:||Working Papers, Department of Economics, Rutgers, the State University of New Jersey 2011,25|
|Abstract:||We prove the existence of strategically stable sets of pure-strategy Nash equilibria (and hence the existence of pure-strategy trembling-hand perfect equilibria) in potential games that admit an upper semicontinuous potential, and we show that generic potential games possess pure-strategy strictly perfect and essential equilibria. In addition, we provide a link between upper semicontinuity of a potential and conditions defined directly on the payoff functions of a potential game. Finally, we show that stable sets and (strictly) perfect equilibria are related to the set of maximizers of a potential, which refines the set of Nash equilibria. Specifically, the set of maximizers of a potential contains a strategically stable set of pure-strategy Nash equilibria (and hence a pure-strategy trembling-hand perfect equilibrium) and, for generic games, any maximizer of a potential is a pure-strategy strictly perfect and essential equilibrium.|
trembling-hand perfect equilibrium
|Document Type:||Working Paper|
|Appears in Collections:||Working Papers, Department of Economics, Rutgers University|
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