Decision Sciences › Management Science and Operations Research

Game Theory and Applications

Works Count: 31151

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Description

This cluster of papers focuses on network formation, game dynamics, and strategic interactions in social and economic networks. It explores topics such as selfish routing, Bayesian learning, information design, reputation, coordination games, and the price of anarchy in network environments.

Keywords

Network Formation; Game Theory; Social Networks; Nash Equilibrium; Bayesian Learning; Information Design; Selfish Routing; Reputation; Coordination Games; Price of Anarchy

Worst-Case Equilibria

1999-01-01

Ηλίας Κουτσουπιάς , Christos H. Papadimitriou

Game Theory for Applied Economists

1992-12-31

Robert Gibbons

This book introduces one of the most powerful tools of modern economics to a wide audience: those who will later construct or consume game-theoretic models. Robert Gibbons addresses scholars in … This book introduces one of the most powerful tools of modern economics to a wide audience: those who will later construct or consume game-theoretic models. Robert Gibbons addresses scholars in applied fields within economics who want a serious and thorough discussion of game theory but who may have found other works overly abstract. Gibbons emphasizes the economic applications of the theory at least as much as the pure theory itself; formal arguments about abstract games play a minor role. The applications illustrate the process of model building--of translating an informal description of a multi-person decision situation into a formal game-theoretic problem to be analyzed. Also, the variety of applications shows that similar issues arise in different areas of economics, and that the same game-theoretic tools can be applied in each setting. In order to emphasize the broad potential scope of the theory, conventional applications from industrial organization have been largely replaced by applications from labor, macro, and other applied fields in economics. The book covers four classes of games, and four corresponding notions of equilibrium: static games of complete information and Nash equilibrium, dynamic games of complete information and subgame-perfect Nash equilibrium, static games of incomplete information and Bayesian Nash equilibrium, and dynamic games of incomplete information and perfect Bayesian equilibrium.

Behavioral Game Theory. Experiments in Strategic Interaction

2003-12-01

Jean‐Robert Tyran

Dynamic Noncooperative Game Theory

1982-01-01

Tamer Başar , Geert Jan Olsder

An Introduction to Game Theory

2013-03-01

Martin J. Osborne

Game-theoretic reasoning pervades economic theory and is used widely in other social and behavioural sciences. An Introduction to Game Theory International Edition, by Martin J. Osborne, presents the main principles … Game-theoretic reasoning pervades economic theory and is used widely in other social and behavioural sciences. An Introduction to Game Theory International Edition, by Martin J. Osborne, presents the main principles of game theory and shows how they can be used to understand economics, social, political, and biological phenomena. The book introduces in an accessible manner the main ideas behind the theory rather than their mathematical expression. All concepts are defined precisely, and logical reasoning is used throughout. The book requires an understanding of basic mathematics but assumes no specific knowledge of economics, political science, or other social or behavioural sciences. Coverage includes the fundamental concepts of strategic games, extensive games with perfect information, and coalitional games; the more advanced subjects of Bayesian games and extensive games with imperfect information; and the topics of repeated games, bargaining theory, evolutionary equilibrium, rationalizability, and maxminimization. The book offers a wide variety of illustrations from the social and behavioural sciences. Each topic features examples that highlight theoretical points and illustrations that demonstrate how the theory may be used.

Learning, Mutation, and Long Run Equilibria in Games

1993-01-01

Michihiro Kandori , George J. Mailath , Rafael Rob

We analyze an evolutionary model with a finite number of players and with noise or mutations.The expansion and contraction of strategies is linked-as usual-to their current relative success, but mutations-which … We analyze an evolutionary model with a finite number of players and with noise or mutations.The expansion and contraction of strategies is linked-as usual-to their current relative success, but mutations-which perturb the system away from its deterministic evolution-are present as well.Mutations can occur in every period, so the focus is on the implications of ongoing mutations, not a one-shot mutation.The effect of these mutations is to drastically reduce the set of equilibria to what we term "long-run equilibria."For 2 x 2 symmetric games with two symmetric strict Nash equilibria the equilibrium selected satisfies (for large populations) Harsanyi and Selten's (1988) criterion of risk-dominance.In particular, if both strategies have equal security levels, the Pareto dominant Nash equilibrium is selected, even though there is another strict Nash equilibrium.

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Existence and Uniqueness of Equilibrium Points for Concave N-Person Games

1965-07-01

Judah B Rosen

Existence and uniqueness of equilibrium points for concave n-person games - dynamic model for nonequilibrium situations Existence and uniqueness of equilibrium points for concave n-person games - dynamic model for nonequilibrium situations

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A Theory of Competition Among Pressure Groups for Political Influence

1983-08-01

Gary S. Becker

Journal Article A Theory of Competition Among Pressure Groups for Political Influence Get access Gary S. Becker Gary S. Becker University of Chicago Search for other works by this author … Journal Article A Theory of Competition Among Pressure Groups for Political Influence Get access Gary S. Becker Gary S. Becker University of Chicago Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 98, Issue 3, August 1983, Pages 371–400, https://doi.org/10.2307/1886017 Published: 01 August 1983

The Strength of Weak Ties: A Network Theory Revisited

1983-01-01

Mark Granovetter

A Garbage Can Model of Organizational Choice

1972-03-01

Michael D. Cohen , James G. March , Johan P. Olsen

Organized anarchies are organizations characterized by problematic preferences, unclear technology, and fluid participation. Recent studies of universities, a familiar form of organized anarchy, suggest that such organizations can be viewed … Organized anarchies are organizations characterized by problematic preferences, unclear technology, and fluid participation. Recent studies of universities, a familiar form of organized anarchy, suggest that such organizations can be viewed for some purposes as collections of choices looking for problems, issues and feelings looking for decision situations in which they might be aired, solutions looking for issues to which they might be an answer, and decision makers looking for work. These ideas are translated into an explicit computer simulation model of a garbage can decision process. The general implications of such a model are described in terms of five major measures on the process. Possible applications of the model to more narrow predictions are illustrated by an examination of the model's predictions with respect to the effect of adversity on university decision making.

Price and Advertising Signals of Product Quality

1986-08-01

Paul Milgrom , John Roberts

We present a signaling model, based on ideas of Phillip Nelson, in which both the introductory price and the level of directly "uninformative" advertising or other dissipative marketing expenditures are … We present a signaling model, based on ideas of Phillip Nelson, in which both the introductory price and the level of directly "uninformative" advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good. Repeat purchases play a crucial role in our model. A second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals.

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Contributions to the theory of games.

1960-04-01

Helmut Kuhn , A. W. Tucker , Melvin Dresher +3 more

Two-Person Cooperative Games

1953-01-01

John C. Nash

In this paper, the autor extends his previous treatment of «The Bargaining Problem» to a wider class of situations in which threats can play a role/ A new approach is … In this paper, the autor extends his previous treatment of «The Bargaining Problem» to a wider class of situations in which threats can play a role/ A new approach is introduced involving the elaboration of the threat concept.

An experimental analysis of ultimatum bargaining

1982-12-01

Werner Güth , Rolf Schmittberger , Bernd Schwarze

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Social Norms and Community Enforcement

1992-01-01

Michihiro Kandori

The present paper extends the theory of self-enforcing agreements in a long-term relationship (the Folk Theorem in repeated games) to the situation where agents change their partners over time. Cooperation … The present paper extends the theory of self-enforcing agreements in a long-term relationship (the Folk Theorem in repeated games) to the situation where agents change their partners over time. Cooperation is sustained because defection against one agent causes sanction by others, and the paper shows how such a "social norm" is sustained by self-interested agents under various degrees of observability. Two main results are presented. The first one is an example where a community can sustain cooperation even when each agent knows nothing more than his personal experience. The second shows a Folk Theorem that the community can realize any mutually beneficial outcomes when each agent carries a label such as reputation, membership, or licence, which are revised in a systematic way.

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A Theory of Conformity

1994-10-01

B. Douglas Bernheim

This paper analyzes a model of social interaction in which individuals care about status as well as "intrinsic" utility (which refers to utility derived directly from consumption). Status is assumed … This paper analyzes a model of social interaction in which individuals care about status as well as "intrinsic" utility (which refers to utility derived directly from consumption). Status is assumed to depend on public perceptions about an individual's predispositions rather than on the individual's actions. However, since predispositions are unobservable, actions signal predispositions and therefore affect status. When status is sufficiently important relative to intrinsic utility, many individuals conform to a single, homogeneous standard of behavior, despite heterogeneous underlying preferences. They are willing to conform because they recognize that even small departures from the social norm will seriously impair their status. The fact that society harshly censures all nonconformists is not simply assumed (indeed, status varies smoothly with perceived type); rather, it is produced endogenously. Despite this penalty, agents with sufficiently extreme preferences refuse to conform. The model provides an explanation for the fact that standards of behavior govern some activities but do not govern others. It also suggests a theory of how standards of behavior might evolve in response to changes in the distribution of intrinsic preferences. In particular, for some values of the preference parameters, norms are both persistent and widely followed; for other values, norms are transitory and confined to small groups. Thus the model produces both customs and fads. Finally, an extension of the model suggests an explanation for the development of multiple subcultures, each with its own distinct norm.

Equilibrium points in <i>n</i> -person games

1950-01-01

John F. Nash

One may define a concept of an n -person game in which each player has a finite set of pure strategies and in which a definite set of payments to … One may define a concept of an n -person game in which each player has a finite set of pure strategies and in which a definite set of payments to the n players corresponds to each n -tuple of pure strategies, one strategy being taken for each player. For mixed strategies, which are probability distributions over the pure strategies, the pay-off functions are the expectations of the players, thus becoming polylinear forms …

Power and Centrality: A Family of Measures

1987-03-01

Phillip Bonacich

Although network centrality is generally assumed to produce power, recent research shows that this is not the case in exchange networks. This paper proposes a generalization of the concept of … Although network centrality is generally assumed to produce power, recent research shows that this is not the case in exchange networks. This paper proposes a generalization of the concept of centrality that accounts for both the usual positive relationship between power and centrality and Cook et al.'s recent exceptional results.

Global Games and Equilibrium Selection

1993-09-01

Hans Carlsson , Eric van Damme

A global game is an incomplete information game where the actual payoffstructure is determined by a rairdom draw from a given class of games and where each player makes a … A global game is an incomplete information game where the actual payoffstructure is determined by a rairdom draw from a given class of games and where each player makes a noisy observation of the selected game.For 2 x 2 games, it is shown that equilibrium play in a global game with vanishing noise forces the players to conform to Harsanyi and Selten's risk dominance criterion.When the uncertainty is one-dimensional, the result may be obtained by repeated elimination of dominated strategies in the global game."1'his pxper is a combinat.ion,and a subatantial generalization, of Carlxson (19R9) and Carlason and Van Damme (1989).Some basic ideas on global games and their telation to risk dominance originate from a note, written by Cadseon in 1985.The suthora thank R.einhard Selten, Lars-Gunnar Svensson, Jdrgen Weibull and various seminar audiences Cor helpful comments.The conatructive criticiam of several referees considerably improved the paper's quality.

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Domestic Political Audiences and the Escalation of International Disputes

1994-09-01

James D. Fearon

International crises are modeled as a political “war of attrition” in which state leaders choose at each moment whether to attack, back down, or escalate. A leader who backs down … International crises are modeled as a political “war of attrition” in which state leaders choose at each moment whether to attack, back down, or escalate. A leader who backs down suffers audience costs that increase as the public confrontation proceeds. Equilibrium analysis shows how audience costs enable leaders to learn an adversary's true preferences concerning settlement versus war and thus whether and when attack is rational. The model also generates strong comparative statics results, mainly on the question of which side is most likely to back down. Publicly observable measures of relative military capabilities and relative interests prove to have no direct effect once a crisis begins. Instead, relative audience costs matter: the side with a stronger domestic audience (e.g., a democracy) is always less likely to back down than the side less able to generate audience costs (a nondemocracy). More broadly, the analysis suggests that democracies should be able to signal their intentions to other states more credibly and clearly than authoritarian states can, perhaps ameliorating the security dilemma between democratic states.

Signaling Games and Stable Equilibria

1987-05-01

In‐Koo Cho , David M. Kreps

Journal Article Signaling Games and Stable Equilibria Get access In-Koo Cho, In-Koo Cho University of Chicago Search for other works by this author on: Oxford Academic Google Scholar David M. … Journal Article Signaling Games and Stable Equilibria Get access In-Koo Cho, In-Koo Cho University of Chicago Search for other works by this author on: Oxford Academic Google Scholar David M. Kreps David M. Kreps Stanford University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 102, Issue 2, May 1987, Pages 179–221, https://doi.org/10.2307/1885060 Published: 01 May 1987

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Game theory: analysis of conflict

1992-01-01

Roger B. Myerson

Preface 1. Decision-Theoretic Foundations 1.1 Game Theory, Rationality, and Intelligence 1.2 Basic Concepts of Decision Theory 1.3 Axioms 1.4 The Expected-Utility Maximization Theorem 1.5 Equivalent Representations 1.6 Bayesian Conditional-Probability Systems … Preface 1. Decision-Theoretic Foundations 1.1 Game Theory, Rationality, and Intelligence 1.2 Basic Concepts of Decision Theory 1.3 Axioms 1.4 The Expected-Utility Maximization Theorem 1.5 Equivalent Representations 1.6 Bayesian Conditional-Probability Systems 1.7 Limitations of the Bayesian Model 1.8 Domination 1.9 Proofs of the Domination Theorems Exercises 2. Basic Models 2.1 Games in Extensive Form 2.2 Strategic Form and the Normal Representation 2.3 Equivalence of Strategic-Form Games 2.4 Reduced Normal Representations 2.5 Elimination of Dominated Strategies 2.6 Multiagent Representations 2.7 Common Knowledge 2.8 Bayesian Games 2.9 Modeling Games with Incomplete Information Exercises 3. Equilibria of Strategic-Form Games 3.1 Domination and Ratonalizability 3.2 Nash Equilibrium 3.3 Computing Nash Equilibria 3.4 Significance of Nash Equilibria 3.5 The Focal-Point Effect 3.6 The Decision-Analytic Approach to Games 3.7 Evolution. Resistance. and Risk Dominance 3.8 Two-Person Zero-Sum Games 3.9 Bayesian Equilibria 3.10 Purification of Randomized Strategies in Equilibria 3.11 Auctions 3.12 Proof of Existence of Equilibrium 3.13 Infinite Strategy Sets Exercises 4. Sequential Equilibria of Extensive-Form Games 4.1 Mixed Strategies and Behavioral Strategies 4.2 Equilibria in Behavioral Strategies 4.3 Sequential Rationality at Information States with Positive Probability 4.4 Consistent Beliefs and Sequential Rationality at All Information States 4.5 Computing Sequential Equilibria 4.6 Subgame-Perfect Equilibria 4.7 Games with Perfect Information 4.8 Adding Chance Events with Small Probability 4.9 Forward Induction 4.10 Voting and Binary Agendas 4.11 Technical Proofs Exercises 5. Refinements of Equilibrium in Strategic Form 5.1 Introduction 5.2 Perfect Equilibria 5.3 Existence of Perfect and Sequential Equilibria 5.4 Proper Equilibria 5.5 Persistent Equilibria 5.6 Stable Sets 01 Equilibria 5.7 Generic Properties 5.8 Conclusions Exercises 6. Games with Communication 6.1 Contracts and Correlated Strategies 6.2 Correlated Equilibria 6.3 Bayesian Games with Communication 6.4 Bayesian Collective-Choice Problems and Bayesian Bargaining Problems 6.5 Trading Problems with Linear Utility 6.6 General Participation Constraints for Bayesian Games with Contracts 6.7 Sender-Receiver Games 6.8 Acceptable and Predominant Correlated Equilibria 6.9 Communication in Extensive-Form and Multistage Games Exercises Bibliographic Note 7. Repeated Games 7.1 The Repeated Prisoners Dilemma 7.2 A General Model of Repeated Garnet 7.3 Stationary Equilibria of Repeated Games with Complete State Information and Discounting 7.4 Repeated Games with Standard Information: Examples 7.5 General Feasibility Theorems for Standard Repeated Games 7.6 Finitely Repeated Games and the Role of Initial Doubt 7.7 Imperfect Observability of Moves 7.8 Repeated Wines in Large Decentralized Groups 7.9 Repeated Games with Incomplete Information 7.10 Continuous Time 7.11 Evolutionary Simulation of Repeated Games Exercises 8. Bargaining and Cooperation in Two-Person Games 8.1 Noncooperative Foundations of Cooperative Game Theory 8.2 Two-Person Bargaining Problems and the Nash Bargaining Solution 8.3 Interpersonal Comparisons of Weighted Utility 8.4 Transferable Utility 8.5 Rational Threats 8.6 Other Bargaining Solutions 8.7 An Alternating-Offer Bargaining Game 8.8 An Alternating-Offer Game with Incomplete Information 8.9 A Discrete Alternating-Offer Game 8.10 Renegotiation Exercises 9. Coalitions in Cooperative Games 9.1 Introduction to Coalitional Analysis 9.2 Characteristic Functions with Transferable Utility 9.3 The Core 9.4 The Shapkey Value 9.5 Values with Cooperation Structures 9.6 Other Solution Concepts 9.7 Colational Games with Nontransferable Utility 9.8 Cores without Transferable Utility 9.9 Values without Transferable Utility Exercises Bibliographic Note 10. Cooperation under Uncertainty 10.1 Introduction 10.2 Concepts of Efficiency 10.3 An Example 10.4 Ex Post Inefficiency and Subsequent Oilers 10.5 Computing Incentive-Efficient Mechanisms 10.6 Inscrutability and Durability 10.7 Mechanism Selection by an Informed Principal 10.8 Neutral Bargaining Solutions 10.9 Dynamic Matching Processes with Incomplete Information Exercises Bibliography Index

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Predation, reputation, and entry deterrence

1982-08-01

Paul Milgrom , John Roberts

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Subjectivity and correlation in randomized strategies

1974-03-01

Robert J. Aumann

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A Cognitive Hierarchy Model of Games

2004-07-28

Colin F. Camerer , Teck‐Hua Ho , Juin-Kuan Chong

Journal Article A Cognitive Hierarchy Model of Games Get access Colin F. Camerer, Colin F. Camerer California Institute of Technology Search for other works by this author on: Oxford Academic … Journal Article A Cognitive Hierarchy Model of Games Get access Colin F. Camerer, Colin F. Camerer California Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar Teck-Hua Ho, Teck-Hua Ho Haas School of Business, University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar Juin-Kuan Chong Juin-Kuan Chong Sungkyunkwan University and National University of Singapore Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 119, Issue 3, August 2004, Pages 861–898, https://doi.org/10.1162/0033553041502225 Published: 01 August 2004

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Correlated Equilibrium as an Expression of Bayesian Rationality

1987-01-01

Robert J. Aumann

Correlated equilibrium is formulated in a manner that does away with the dichotomy usually perceived between the "Bayesian" and the "game-theoretic" view of the world.From the Bayesian viewpoint, probabilities should … Correlated equilibrium is formulated in a manner that does away with the dichotomy usually perceived between the "Bayesian" and the "game-theoretic" view of the world.From the Bayesian viewpoint, probabilities should be assignable to everything, including the prospect of a player choosing a certain strategy in a certain game.The so-called "game-theoretic" viewpoint holds that probabilities can only be assigned to events not governed by rational decision makers; for the latter, one must substitute an equilibrium (or other game-theoretic) notion.The current formulation synthesizes the two viewpoints: Correlated equilibrium is viewed as the result of Bayesian rationality; the equilibrium condition appears as a simple maximization of utility on the part of each player, given his information.A feature of this approach is that it does not require explicit randomization on the part of the players.Each player always chooses a definite pure strategy, with no attempt to randomize; the probabilistic nature of the strategies reflects the uncertainty of other players about his choice.Examples are given.

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The Evolution of Conventions

1993-01-01

H. Peyton Young

The author shows how a group of individuals can learn to play a coordination game without any common knowledge and with only a small amount of rationality. The game is … The author shows how a group of individuals can learn to play a coordination game without any common knowledge and with only a small amount of rationality. The game is repeated many times by different players. Each player chooses an optimal reply based on incomplete information about what other players have done in the past. Occasionally they make mistakes. When the likelihood of mistakes is very small, typically one coordination equilibrium will be played almost all of the time over the long run. This stochastically stable equilibrium can be computed analytically using a general theorem the author proves on perturbed Markov processes. Copyright 1993 by The Econometric Society.

Reputation and imperfect information

1982-08-01

David M. Kreps , Robert Wilson

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Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities

1990-11-01

Paul Milgrom , John Roberts

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 … 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.

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Unraveling in Guessing Games: An Experimental Study

2007-01-01

Rosemarie Nagel

Consider the following game: a large number of players have to state simultaneously a number in the closed interval [0, 100]. The winner is the person whose chosen number is … Consider the following game: a large number of players have to state simultaneously a number in the closed interval [0, 100]. The winner is the person whose chosen number is closest to the mean of all chosen numbers multiplied by a parameter p, where p is a predetermined positive parameter of the game; p is common knowledge. The payoff to the winner is a fixed amount, which is independent of the stated number and p. If there is a tie, the prize is divided equally among the winners. The other players whose chosen numbers are further away receive nothing.' The game is played for four rounds by the same group of players. After each round, all chosen numbers, the mean, p times the mean, the winning numbers, and the payoffs are presented to the subjects. For 0 c p < 1, there exists only one Nash equilibrium: all players announce zero. Also for the repeated supergame, all Nash equilibria induce the same announcements and payoffs as in the one-shot game. Thus, game theory predicts an unambiguous outcome. The structure of the game is favorable for investigating whether and how a player's mental process incorporates the behavior of the other players in conscious reasoning. An explanation proposed, for out-of-equilibrium behavior involves subjects engaging in a finite depth of reasoning on players' beliefs about one another. In the simplest case, a player selects a strategy at random without forming beliefs or picks a number that is salient to him (zero-order belief). A somewhat more sophisticated player forms first-order beliefs on the behavior of the other players. He thinks that others select a number at random, and he chooses his best response to this belief. Or he forms second-order beliefs on the first-order beliefs of the others and maybe nth order beliefs about the (n I )th order beliefs of the others, but only up to a finite n, called the ndepth of reasoning. The idea that players employ finite depths of reasoning has been studied by various theorists (see e.g., Kenneth Binmore, 1987, 1988; Reinhard Selten, 1991; Robert Aumann, 1992; Michael Bacharach, 1992; Cristina Bicchieri, 1993; Dale 0. Stahl, 1993). There is also the famous discussion of newspaper competitions by John M. Keynes (1936 p. 156) who describes the mental process of competitors confronted with picking the face that is closest to the mean preference of all competitors.2 Keynes's game, which he considered a Gedankenexperiment, has p = 1. However, with p = 1, one cannot distinguish between different steps of reasoning by actual subjects in an experiment. There are some experimental studies in which reasoning processes have been analyzed in ways similar to the analysis in this paper. Judith Mehta et al. (1994), who studied behavior in two-person coordination games, suggest that players coordinate by either applying depth of reasoning of order I or by picking a focal point (Thomas C. Schelling, 1964), which they call Schelling salience. Stahl and Paul W. Wilson (1994) analyzed behavior in symmetric 3 x 3 games and concluded that subjects were using depths of reasoning of orders 1 or 2 or a Nash-equilibrium strategy. * Department of Economics, Universitat Pompeu Fabra, Balmes 132, Barcelona 08008, Spain. Financial support from Deutsche Forschungsgemeinschaft (DFG) through Sonderforschungsbereich 303 and a postdoctoral fellowship from the University of Pittsburgh are gratefully acknowledged. I thank Reinhard Selten, Dieter Balkenborg, Ken Binmore, John Duffy, Michael Mitzkewitz, Alvin Roth, Karim Sadrieh, Chris Starmer, and two anonymous referees for helpful discussions and comments. I learned about the guessing game in a game-theory class given by Roger Guesnerie, who used the game as a demonstration experiment. 'The game is mentioned, for example, by Herve Moulin (1986), as an example to explain rationalizability, and by Mario H. Simonsen (1988). 2 This metaphor is frequently mentioned in the macroeconomic literature (see e.g., Roman Frydman, 1982).

Theory of games and economic behavior

2019-06-12

Stephan Ramon Garcia , Steven J. Miller

This is the classic work upon which modern-day game theory is based. What began more than sixty years ago as a modest proposal that a mathematician and an economist write … This is the classic work upon which modern-day game theory is based. What began more than sixty years ago as a modest proposal that a mathematician and an economist write a short paper together blossomed, in 1944, when Princeton University Press published Theory of Games and Economic Behavior. In it, John von Neumann and Oskar Morgenstern conceived a groundbreaking mathematical theory of economic and social organization, based on a theory of games of strategy. Not only would this revolutionize economics, but the entirely new field of scientific inquiry it yielded--game theory--has since been widely used to analyze a host of real-world phenomena from arms races to optimal policy choices of presidential candidates, from vaccination policy to major league baseball salary negotiations. And it is today established throughout both the social sciences and a wide range of other sciences.

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Strategic Information Transmission

1982-11-01

Vincent P. Crawford , Joel Sobel

This paper develops a model of strategic communication, in which a better-informed Sender (S) sends a possibly noisy signal to a Receiver (R), who then takes an action that determines … This paper develops a model of strategic communication, in which a better-informed Sender (S) sends a possibly noisy signal to a Receiver (R), who then takes an action that determines the welfare of both. We characterize the set of Bayesian Nash equilibria under standard assumptions, and show that equilibrium signaling always takes a strikingly simple form, in which S partitions the support of the (scalar) variable that represents his private information and introduces noise into his signal by reporting, in effect, only which element of the partition his observation actually lies in. We show under further assumptions that before S observes his private information, the equilibrium whose partition has the greatest number of elements is Pareto-superior to all other equilibria, and that if agents coordinate on this equilibrium, R's equilibrium expected utility rises when agents' preferences become more similar. Since R bases his choice of action on rational expectations, this establishes a sense in which equilibrium signaling is more informative when agents' preferences are more similar.

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The Nash Bargaining Solution in Economic Modelling

1986-01-01

Ken Binmore , Ariel Rubinstein , Asher Wolinsky

This article establishes the relationship between the static axiomatic theory of bargaining and the sequential strategic approach to bargaining. We consider two strategic models of alternating offers. The models differ … This article establishes the relationship between the static axiomatic theory of bargaining and the sequential strategic approach to bargaining. We consider two strategic models of alternating offers. The models differ in the source of the incentive of the bargaining parties to reach agreement: the bargainers' time preference and the risk of breakdown of negotiations. Each of the models has a unique perfect equilibrium. When the motivation to reach agreement is made negligible, in each model the unique perfect equilibrium outcome approaches the Nash bargaining solution with utilities that reflect the incentive to settle and with the proper disagreement point chosen. The results provide a guide for the application of the Nash bargaining solution in economic modelling.

Complementarities and fit strategy, structure, and organizational change in manufacturing

1995-03-01

Paul Milgrom , John Roberts

A Strategic Model of Social and Economic Networks

1996-10-01

Matthew O. Jackson , Asher Wolinsky

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A Social Equilibrium Existence Theorem*

1952-10-01

Gérard Debreu

Civil infrastructure will be essential to face the interlinked existential threats of climate change and rising resource demands while ensuring a livable Anthropocene for all. However, conventional infrastructure planning largely … Civil infrastructure will be essential to face the interlinked existential threats of climate change and rising resource demands while ensuring a livable Anthropocene for all. However, conventional infrastructure planning largely neglects the ...

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The Theory of Games and Economic Behavior

1945-08-01

R. Wes Harrison , John von Neumann , Oskar Morgenstern

Non-cooperative games

1989-01-27

John F. Nash

Von Neumann and Morgenstern have developed a very fruitful theory of two-person zero-sum games in their book Theory of Games and Economic Behavior. This book also contains a theory of … Von Neumann and Morgenstern have developed a very fruitful theory of two-person zero-sum games in their book Theory of Games and Economic Behavior. This book also contains a theory of n-person games of a type which we would call cooperative. This theory is based on an analysis of the interrelationships of the various coalitions which can be formed by the players of the game.

Stochastic Games

1953-10-01

Lloyd S. Shapley

Understanding the biological basis of social anxiety disorder (SAD), one of the most disabling of the anxiety disorders, will allow for novel treatment strategies to be developed. Here, we show … Understanding the biological basis of social anxiety disorder (SAD), one of the most disabling of the anxiety disorders, will allow for novel treatment strategies to be developed. Here, we show that gut microbiota may be such a target. Mice ...Social anxiety disorder (SAD) is a crippling psychiatric disorder characterized by intense fear or anxiety in social situations and their avoidance. However, the underlying biology of SAD is unclear and better treatments are needed. Recently, the gut ...

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The Folk Theorem in Repeated Games with Discounting or with Incomplete Information

1986-05-01

Drew Fudenberg , Eric Maskin

When either there are only two players or a full dimensionality condition holds, any individually rational payoff vector of a one-shot game of complete information can arise in a equilibrium … When either there are only two players or a full dimensionality condition holds, any individually rational payoff vector of a one-shot game of complete information can arise in a equilibrium of the infinitely-repeated game if players are sufficiently patient. In contrast to earlier work, mixed strategies are allowed in determining the individually rational payoffs (even when only realized actions are observable). Any individually rational payoffs of a one-shot game can be approximated by sequential equilibrium payoffs of a long but finite game of incomplete information, where players' payoffs are almost certainly as in the one-shot game. THAT STRATEGIC RIVALRY in a long-term relationship may differ from that of a one-shot game is by now quite a familiar idea. Repeated play allows players to respond to each other's actions, and so each player must consider the reactions of his opponents in making his decision. The fear of retaliation may thus lead to outcomes that otherwise would not occur. The most dramatic expression of this phenomenon is the celebrated for repeated games. An outcome that Pareto dominates the minimax point is called individually rational. The Folk Theorem asserts that any individually rational outcome can arise as a equilibrium in infinitely repeated games with sufficiently little discounting. As Aumann and Shapley [3] and Rubinstein [20] have shown, the same result is true when we replace the word Nash by (subgame) perfect and assume no discounting at all. Because the Aumann-Shapley/Rubinstein result supposes literally no discounting, one may wonder whether the exact counterpart of the Folk Theorem holds for equilibrium, i.e., whether as the discount factor tends to one, the set of equilibrium outcomes converges to the individually rational set. After all, agents in most games of economic interest are not completely patient; the no discounting case is of interest as an approximation. It turns out that this counterpart is false. There can be a discontinuity (formally, a failure of lower hemicontinuity) where the discount factor, 8, equals one, as we show in Example 3. Nonetheless the games in which discontinuities occur are quite degenerate, and, in the end, we can give a qualified yes (Theorem 2) to the question of whether the Folk Theorem holds with discounting. In particular, it always holds in two-player games (Theorem 1). This last result contrasts with the recent work of Radner-Myerson-Maskin [18] showing that, even in two-player games, the equilibrium set may not be continuous at 8 = 1 in

Theory of Games and Economic Behavior

1945-09-27

E. N. , John von Neumann , Oskar Morgenstern

Networks versus markets in international trade

1999-06-01

James E. Rauch

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Mathematical Games

1970-10-01

Martin Gardner

Sequential Equilibria

1982-07-01

David M. Kreps , Robert B. Wilson

Bayesian Persuasion

2011-10-01

Emir Kamenica , Matthew Gentzkow

When is it possible for one person to persuade another to change her action? We consider a symmetric information model where a sender chooses a signal to reveal to a … When is it possible for one person to persuade another to change her action? We consider a symmetric information model where a sender chooses a signal to reveal to a receiver, who then takes a noncontractible action that affects the welfare of both players. We derive necessary and sufficient conditions for the existence of a signal that strictly benefits the sender. We characterize sender-optimal signals. We examine comparative statics with respect to the alignment of the sender's and the receiver's preferences. Finally, we apply our results to persuasion by litigators, lobbyists, and salespeople. (JEL D72, D82, D83, K40, M31)

Evolutionary Game Theory

1996-09-01

Drew Fudenberg , Jörgen W. Weibull

Risk-sensitive Markov-perfect equilibrium

2025-06-25

Madhvi Shinde Bhatt , Matthew J. Sobel | Annals of Operations Research

Analytical Validation of the Malatya Dominating Set Algorithm: Constructing Optimal Dominating Sets Without Redundant Nodes

2025-06-24

Şeyda Karcı , Fatih Okumuş | Muş Alparslan Üniversitesi Fen Bilimleri Dergisi

This study focuses on the theoretical proof of the Malatya Dominating Set Algorithm (MDSA). MDSA is a dominating set determination algorithm that combines greedy and dynamic programming techniques by using … This study focuses on the theoretical proof of the Malatya Dominating Set Algorithm (MDSA). MDSA is a dominating set determination algorithm that combines greedy and dynamic programming techniques by using the concept of centrality and thus produces optimum or near-optimum solutions. In the previous study, the MDSA algorithm has been experimentally implemented on various datasets and successful results have been obtained. However, these experimental successes need to be proven analytically with theoretical evidence. For this purpose, in this study, it is analytically proven that MDSA produces optimum or near-optimum results on some special graph types (paths, cycles, star graphs, two-sided graphs, etc.). In the study, it is examined in detail how MDSA produces the minimum dominant set when applied to specific graph structures. In the proof process, it is mathematically shown how centrality calculations affect the selection of dominating set and how the algorithm produces redundant-free dominating set by eliminating unnecessary nodes. In conclusion, this study strengthens the theoretical foundations of MDSA and analytically demonstrates its advantages in certain graph types when compared to other dominating set algorithms in the literature.

The Prekernel of Cooperative Games with $$\alpha $$-Excess

2025-06-23

Xia Zhang , René van den Brink , Arantza Estévez-Fernández | Journal of Optimization Theory and Applications

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Efficiency in the two-way connections model

2025-06-19

Alan Griffith | International Journal of Game Theory

Coordination in a two-sided market entry game with endogenous capacity: an experimental investigation

2025-06-18

Yali Dong , Ziyou Gao , Xiao Han +3 more | Experimental Economics

The rates of learning with public and private signals

2025-06-18

Dengwei Qi | Mathematical Social Sciences

A sequence-form differentiable path-following method to compute Nash equilibria

2025-06-17

Yuqing Hou , Yiyin Cao , Chuangyin Dang +1 more | Computational Optimization and Applications

Educational Signaling in Two Different Education Systems

2025-06-17

Miguel Ángel Ropero García | The B E Journal of Theoretical Economics

Abstract We consider a two-period signaling model in which an informed worker has to decide whether she invests in education or participates in the labor market in the first period. … Abstract We consider a two-period signaling model in which an informed worker has to decide whether she invests in education or participates in the labor market in the first period. When the rate at which the cost of education decreases with the worker’s productivity is sufficiently high (low), the worker’s incentives to invest in education become stronger (weaker) when the worker is more patient, when future prospects in the labor market are better, or when the cost of education decreases. Those results are robust to the worker’s risk preferences and to the specification of the prior distribution function of worker’s productivities.

Payment schemes for finitely repeated Prisoner’s Dilemma games

2025-06-16

Elena Parilina , Alena Pisareva , Georges Zaccour | Theory and Decision

Two Choice Behavioral Game Dynamics with Myopic-Rational and Herding Players

2025-06-16

Khushboo Agarwal , Konstantin Avrachenkov , Raghupati Vyas +1 more | ACM SIGMETRICS Performance Evaluation Review

In classical game theory, the players are assumed to be rational and intelligent, which is often contradictory to reality. We consider more realistic behavioral game dynamics where the players choose … In classical game theory, the players are assumed to be rational and intelligent, which is often contradictory to reality. We consider more realistic behavioral game dynamics where the players choose actions in a turn-by-turn manner and exhibit two prominent behavioral traits --- α-fraction of them are myopic who strategically choose optimal actions against the empirical distribution of the previous plays, while others herd towards the most popular action till then. Our analysis focuses on scenarios when players encounter two possible choices and get to play only once. We constructively derive the almost sure mean-field limits of such dynamics. Further, we provide comparisons across various levels and types of rationality. Our framework extends naturally to model avoid-the-crowd behavior. Finally, we illustrate our results with two practical examples: the participation game and the routing game.

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Co-odd domination in graphs

2025-06-13

Jayjit Barman , Шибсанкар Дас | Contributions to Mathematics

Mathematical analysis of competitive dynamics between two regional areas

2025-06-12

Lahcen Boulaasair , Hassane Bouzahir , N. Seshagiri Rao +2 more | Journal of Inequalities and Applications

Decomposition and equilibrium analysis of multi-potential games: aligning individual interest with group welfare

2025-06-06

Aixin Liu , Haitao Li , Lin Wang | Science China Information Sciences

Non‐Hamiltonian Cycles in Tournaments

2025-06-02

Ayman El Zein | Journal of Graph Theory

ABSTRACT A cycle is said to be directed if all its arcs have the same direction. Otherwise, it is said to be nondirected. A strong tournament is a tournament containing … ABSTRACT A cycle is said to be directed if all its arcs have the same direction. Otherwise, it is said to be nondirected. A strong tournament is a tournament containing a directed path from any vertex to any other vertex. A tournament that is not strong is said to be reducible. Rosenfeld conjectured that there exists an integer such that every tournament of order contains any Hamiltonian nondirected cycle. Havet proved this conjecture for and for reducible tournaments for . Finding non‐Hamiltonian cycles seems more simple. Thomason proved that any tournament of order contains any nondirected cycle of order . This implies the existence of cycles of order , in every tournament of order . He said that the result is probably true for . In this paper, we prove the existence of any nondirected cycle of order , in every tournament of order unless five exceptions.

Collaborate or compete? Decentralized resource allocation between local authorities during COVID-19 based on evolutionary game theory

2025-06-01

Wang Xi-hui , Anqi Zhu , Yu Fan +1 more | Socio-Economic Planning Sciences

Game Theory and the Prisoner’s Dilemma in Negotiations

2025-06-01

| WORLD SCIENTIFIC (EUROPE) eBooks

Optimal Timing in Competition for Advantage: A Two‐Stage Contest

2025-06-01

Konstantinos Protopappas | Journal of Public Economic Theory

ABSTRACT We study a two‐stage contest between two players who differ in ability, with a prize awarded in the second stage. In the first stage, players compete, and the winner … ABSTRACT We study a two‐stage contest between two players who differ in ability, with a prize awarded in the second stage. In the first stage, players compete, and the winner enjoys a reduced effort cost in the second stage. The second‐stage contest is simultaneous, while the first‐stage contest can be simultaneous or sequential. We investigate how a sequential first stage affects the catching‐up and discouragement effects between players. Additionally, we explore the optimal first‐stage timing structure of contest designers with different objectives, that is, maximizing effort in the second stage, total effort across both stages, or the winner's total effort. Interestingly, a designer focused on maximizing second‐stage effort prefers a simultaneous first‐stage contest, contrary to the conventional intuition that the stronger player should lead.

Periodicity in Hedge-Myopic System and an Asymmetric NE-Solving Paradigm for Two-Player Zero-Sum Games

2025-05-30

Xinxiang Guo , Yifen Mu , Xiaoguang Yang | Dynamic Games and Applications

Stationary Markov Equilibrium Strategies in Stochastic Games: Existence and Computation

2025-05-29

S. K. Chakrabarti , Qin Hu | Computational Economics

Book review

2025-05-28

Minxia Tong , Chengtuan Li | Journal of Pragmatics

Antisocial learning

2025-05-28

J. Allan Best | Economic Theory

Persuaded Search

2025-05-27

Teddy Mekonnen , Zeky Murra-Anton , Bobak Pakzad-Hurson

Memoryless-Strategy Equilibria of a <i>N</i>-Player War of Attrition Game with Complete Information

2025-05-26

Hao Wang

Abstract Consider a war of attrition game in continuous time with complete information, in which N ≥ 2 players compete for N − K prizes. I focus on the equilibria … Abstract Consider a war of attrition game in continuous time with complete information, in which N ≥ 2 players compete for N − K prizes. I focus on the equilibria in which the strategies follow exponential distributions, which are memoryless. When K = 1, such an equilibrium can be explicitly characterized. The equilibrium certainly exists if N = 2. If N ≥ 3, it exists as long as the weakest player is not too weak compared to the average. If it exists, the equilibrium is unique under some conditions. When K ≥ 2, the game typically has nondegenerate equilibria in which K − 1 relatively weak players concede at the beginning. The model can be extended to the case in which the players have loser-dependent valuations. The model helps to solve a generalized exit game in a “nature oligopoly” and an all-pay auction with ascending bids.

Replicator Dynamics for Stochastic Games

2025-05-24

Divya Murali , K. S. Mallikarjuna Rao , A. J. Shaiju

Accounting for variability in conflict dynamics: A pattern-based predictive model

2025-05-22

Thomas Schincariol , Hartmut Frank , Thomas Chadefaux

Existing models for predicting conflict fatalities frequently produce conservative forecasts that gravitate towards the mean. While these approaches have a low average prediction error, they offer limited insights into temporal … Existing models for predicting conflict fatalities frequently produce conservative forecasts that gravitate towards the mean. While these approaches have a low average prediction error, they offer limited insights into temporal variations in conflict-related fatalities. Yet, accounting for variability is particularly relevant for policymakers, providing an indication on when to intervene. In this article, we introduce a novel risk-taking methodology, the ‘Shape finder’, designed to capture variability in fatality data, or rather the sudden surges and declines in the number of deaths over time. The method involves isolating historically analogous sequences of fatalities to create a reference repository. Comparing the shape of the input sequence to the historical references, the most similar historical cases are selected. Predictions are then generated using the average future outcomes of the selected matches. The Shape finder is derived from the theoretical understanding that strategic and adaptive interactions between the government and a non-state armed group produce recurring temporal patterns in fatality data, which are indicative of broader developments. In this article, we demonstrate that our approach maintains high accuracy while significantly enhancing the ability to predict shifts, surges, and declines in conflict fatalities over time. We show that combining the Shape finder with existing approaches, the Violence Early-Warning System ensemble, achieves a lower mean squared error and better accounts for variability in fatality data. The Shape finder methodology performs particularly well for high intensity cases, or rather country-months with substantial armed violence.

Experience goods, reinforcement learning, and social networks

2025-05-21

Louis Dalpra

Restricted dynamic consistency

2025-05-21

Lorenzo Maria Stanca

Specifying a game-theoretic extensive form as an abstract 5-ary relation

2025-05-21

Peter A. Streufert

Emergent coordination without symmetry breaking in Minority Game via policy-based reinforcement learning

2025-05-20

Wen-Jia Rao , Han Miao , Wenbo Xu

Analyzing Equilibrium Pricing Dynamics in Oligopolistic Telecommunications Networks

2025-05-19

Slim Belhaiza

Biased recommendations and differentially informed consumers

2025-05-17

Martin Peitz , Anton Sobolev

Computing Perfect Pairwise Stable Networks

2025-05-16

Caihua Chen , Peixuan Li , Junhao Tao +1 more

Signals Concealing Positive Information Can Coexist in the General Beer-and-Quiche Type Games

2025-05-15

Shan Sun , Igor V. Erovenko , Jan Rychtář +1 more

Selection Regimes and Selection Errors

2025-05-14

Dmitry Sharapov , Linus Dahlander

How can the selection of innovation projects be designed to reduce false positives and false negatives? Prior research has provided theoretical insights into organizing to reduce errors, yet we know … How can the selection of innovation projects be designed to reduce false positives and false negatives? Prior research has provided theoretical insights into organizing to reduce errors, yet we know little about how organizations adapt selection over time and the effects of this on selection outcomes. Drawing from qualitative data from 126 interviews conducted over several years, we explore how an accelerator evolved through three selection regimes for high-stakes funding decisions, focusing on the organizational changes and their underlying reasons. We then analyze quantitative data from all 3,580 submissions they received, assessing false positives and false negatives across these regimes. Our findings reveal a persistent occurrence of both types of errors, with relatively small differences across the regimes despite deliberate efforts to enhance the process. In the final regime, which increased submission quality by emphasizing applicant track record and adding additional layers of screening, evaluators surprisingly became more prone to making selection errors. This finding stands net of accounting for (1) differences in the pool of submissions, (2) differences in treatment effects through training and resources provided, (3) learning, and (4) market evolution. By combining qualitative and quantitative data, we explain this through two mechanisms: (1) mean reversion in combination with increased emphasis on applicant track record and (2) within-type adverse selection enabled by a more stringent selection process. The study reveals that evolving an organization’s selection regime may require adjustments across multiple aspects, resulting in unintended consequences. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.17482 .

Hamate-pisiform coalition

2025-05-14

Dalia Ibrahim

netivreg: Estimation of peer effects in endogenous social networks

2021-08-07

Juan Estrada

I present the netivreg command, which implements the generalized three-stage least-squares (G3SLS) estimator for the endogenous linear-in-means model developed in Estrada et al. (2020, “On the Identification and Estimation of … I present the netivreg command, which implements the generalized three-stage least-squares (G3SLS) estimator for the endogenous linear-in-means model developed in Estrada et al. (2020, “On the Identification and Estimation of Endogenous Peer Effects in Multiplex Networks). The G3SLS procedure utilizes full observability of a two-layered multiplex network data structure using Stata 16's new multiframes capabilities and Python integration. Implementations of the command utilizing simulated data as well as three years' worth of data on peer-reviewed articles published in top general-interest journals in economics in Estrada et al. (2020) are also included.

Are the Players in an Interactive Belief Model Meta-certain of the Model Itself?

2021-01-01

Satoshi Fukuda

In an interactive belief model, are players meta-certain of model itself? This paper formalizes such implicit meta-certainty assumption. To that end, paper expands objects of players' beliefs from events to … In an interactive belief model, are players meta-certain of model itself? This paper formalizes such implicit meta-certainty assumption. To that end, paper expands objects of players' beliefs from events to functions defined on underlying states. Then, paper defines player's belief-generating map: it associates, with each state, whether player believes each event at that state. The paper formalizes what it means by: a player is (meta-)certain of her own belief-generating or the players are (meta-)certain of profile of belief-generating maps (i.e., model). The paper shows: player is (meta-)certain of her own belief-generating map if and only if her beliefs are introspective. The players are commonly (meta-)certain of model if and only if, for any event which some player i believes at some state, it is common belief at state that player i believes event. This paper then asks whether meta-certainty assumption is needed for an epistemic characterization of game-theoretic solution concepts. The paper shows: if each player is logical and (meta-)certain of her own strategy and belief-generating map, then each player correctly believes her own rationality. Consequently, common belief in rationality alone leads to actions that survive iterated elimination of strictly dominated actions.