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Equilibrium Selection in Signaling Games

Banks, Jeffrey S. and Sobel, Joel (1985) Equilibrium Selection in Signaling Games. Social Science Working Paper, 656. California Institute of Technology , Pasadena, CA. (Unpublished)

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We present a refinement of the set of sequential equilibria [Kreps & Wilson (1982)] for generic signaling games based on rationality postulates for off-the-equilibrium-path beliefs. This refinement concept eliminates equilibria which Kreps (1985) and others dismiss on intuitive grounds. In addition, we derive a characterization of the set of stable equilibria [Kohlberg and Mertens (1982)] for generic signaling games in terms of equilibrium strategies and restrictions on beliefs. Examples are given which differentiate the predictions of these equilibrium concepts.

Item Type:Report or Paper (Working Paper)
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Additional Information:Revised. Original dated to March 1985. Presented at the 5th World Congress of the Econometric Society, Boston MA, August 1985. We thank participants of Caltech, UCSD and Rand Corporation Theory Workshops, Drew Fudenberg, David Kreps, and two referees for valuable comments. Sobel thanks Joe Farrell and Chris Harris for many conversations on related topic and the National Science Foundation for partial support under grant SES 84-08655. Published as Banks, Jeffrey S., and Joel Sobel. "Equilibrium selection in signaling games." Econometrica: Journal of the Econometric Society (1987): 647-661.
Group:Social Science Working Papers
Funding AgencyGrant Number
NSFSES 84-08655
Subject Keywords:Nash equilibrium, Game theory, Divinity, Extensive form games, Banks, Probability distributions, Cardinality, Expected utility, Defendants, Utility functions
Series Name:Social Science Working Paper
Issue or Number:656
Record Number:CaltechAUTHORS:20170915-161826033
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81505
Deposited By: Jacquelyn Bussone
Deposited On:19 Sep 2017 17:49
Last Modified:03 Oct 2019 18:43

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