Güth, Werner Kirchsteiger, Georg Ritzberger, Klaus
Year of Publication:
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 35
In a two-stage extensive form game where followers can observe moves by leaders only with noise, pure subgame perfect Nash equilibria of the limiting game without noise may not survive arbitrarily small noise. Still, for generic games, there is always at least one subgame perfect equilibrium outcome of the game with no noise that is approximated by equilibrium outcomes of games with small noise. This, however, depends crucially on generic payoffs.