Axiomatic Theory of Equilibrium in Signaling Games with Generic Payoffs

33 Pages Posted: 22 Oct 2008

See all articles by Srihari Govindan

Srihari Govindan

University of Rochester

Robert Wilson

Stanford Graduate School of Business

Date Written: September 1, 2008

Abstract

Three axioms from decision theory select sets of Nash equilibria of signaling games in extensive form with generic payoffs. The axioms require undominated strategies (admissibility), inclusion of a sequential equilibrium (backward induction), and dependence only on the game's normal form even when embedded in a larger game with redundant strategies or irrelevant players(small worlds). The axioms are satisfied by a set that is stable (Mertens, 1989) and conversely the axioms imply that each selected set is stable and thus an essential component of admissible equilibria with the same outcome.

Suggested Citation

Govindan, Srihari and Wilson, Robert B., Axiomatic Theory of Equilibrium in Signaling Games with Generic Payoffs (September 1, 2008). Stanford University Graduate School of Business Research Paper No. 2000, Available at SSRN: https://ssrn.com/abstract=1287385 or http://dx.doi.org/10.2139/ssrn.1287385

Srihari Govindan

University of Rochester ( email )

Department of Economics
Rochester, NY NY 14627
United States
5852757214 (Phone)

Robert B. Wilson

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-8620 (Phone)
650-725-7979 (Fax)

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