Publisher:
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science, Evanston, IL
Abstract:
Often, perfect bayesian equilibrium is loosely defined by stating that players should be sequentially rational given some beliefs in which Bayes rule is applied whenever possible. We show that there are games in which it is not clear what whenever possible means. Then, we provide a simple definition of perfect bayesian equilibrium for general extensive games that refines both weak perfect equilibrium and subgame perfect equilibrium.