A Note on Risk Dominance and Sequential Equilibrium

5 Pages Posted: 16 Jun 2008

See all articles by Murray Brown

Murray Brown

SUNY at Buffalo, College of Arts & Sciences, Department of Economics

Shin-Hwan Chiang

York University - Department of Economics

Abstract

This note shows that the loss deviations in Selten's (1995) risk dominance measure are the same as the arguments of the probability of a strategy that supports a sequential equilibrium. Risk dominance is used to select among Nash equilibria, while sequential equilibrium, which is stronger than the Nash solution, can be viewed as reducing the set of equilibria. Despite their similarity, examples are given to show they can give materially different predictions. We discuss why the differences arise.

Keywords: Noncooperative Games, Risk Dominance

JEL Classification: C72, C79

Suggested Citation

Brown, Murray and Chiang, Shin-Hwan, A Note on Risk Dominance and Sequential Equilibrium. Available at SSRN: https://ssrn.com/abstract=1146703 or http://dx.doi.org/10.2139/ssrn.1146703

Murray Brown (Contact Author)

SUNY at Buffalo, College of Arts & Sciences, Department of Economics ( email )

Fronczak Hall
Buffalo, NY 14260
United States
716-838-1941 (Phone)
716-645-2127 (Fax)

Shin-Hwan Chiang

York University - Department of Economics ( email )

4700 Keele St.
Toronto, Ontario M3J 1P3
Canada
416-736-5083 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
125
Abstract Views
976
Rank
405,255
PlumX Metrics