Rationalizability, learning, and equilibrium in games with strategic complementarities. (English) Zbl 0728.90098

Milgrom, Paul; Roberts, John

Econometrica 58, No. 6, 1255-1277 (1990).

Summary: We study a rich class of noncooperative games that includes models of oligopoly competition, macroeconomic coordination failures, arms races, bank runs, technology adoption and diffusion, R & D competition, pretrial bargaining, coordination in teams, and many others. For all these games, the sets of pure strategy Nash equilibria, correlated equilibria, and rationalizable strategies have identical bounds. Also, for a class of models of dynamic adaptive choice behavior that encompasses both best-response dynamics and Bayesian learning, the players’ choices lie eventually within the same bounds. These bounds are shown to vary monotonically with certain exogenous parameters.

MSC:

91A10	Noncooperative games
91B62	Economic growth models
68T05	Learning and adaptive systems in artificial intelligence

Keywords:

supermodular games; iterated dominance; noncooperative games; oligopoly; pure strategy Nash equilibria; correlated equilibria; rationalizable strategies; Bayesian learning; bounds