Seminar in Microeconomics - Christian W. Bach (University of Liverpool & EPICENTER Maastricht)
Incomplete Information and Generalized Iterated Strict Dominance
Wednesday 15 May 2019 (11h00 - 12h30) - Extranef - 109
A fundamental solution concept for static games with complete information iteratively deletes choices that are strictly dominated. Here, we devise such an algorithm in terms of decision problems for the more general case of incomplete information. The ensuing solution concept of generalized iterated strict dominance is then characterized in terms of common belief in rationality as well as in terms of best response sets. Generalized iterated strict dominance thus lacks a correct beliefs assumption and thereby constitutes a non-equilibrium solution solution concept for static games with incomplete information. We hope that generalized iterated strict dominance could maybe serve as a useful new tool for applied work in situations involving payoff uncertainty. Besides, we provide doxastic correctness conditions that are necessary and sufficient for modelling complete information from a one-person perspective.