Robust Rationalizability Under Almost Common Certainty of Payoff

Stephen Morris (1) , Satoru Takahashi (2) , Olivier Tercieux (3, 4)

1 Princeton University
2 Department of economics
3 PSE - Paris-Jourdan Sciences Economiques
4 PSE - Paris School of Economics

An action is robustly rationalizable if it is rationalizable for every type who has almost common certainty of payoffs. We illustrate by means of an example that an action may not be robustly rationalizable even if it is weakly dominant, and argue that robust rationalizability is a very stringent refinement of rationalizability. Nonetheless, we show that every strictly rationalizable action is robustly rationalizable. We also investigate how permissive robust rationalizability becomes if we require that players be fully certain of their own payoffs.

Domaines: Economies et finances

Stephen Morris, Satoru Takahashi, Olivier Tercieux. Robust Rationalizability Under Almost Common Certainty of Payoff. Japanese Economic Review, 2012, 63 (1), pp.57-67. ⟨10.1111/j.1468-5876.2011.00553.x⟩. ⟨hal-00813054⟩