Entropic selection of Nash equilibrium

Alioğulları, Zeynel Harun and Barlo, Mehmet (2012) Entropic selection of Nash equilibrium. [Working Paper / Technical Report] Sabanci University ID:10.5900/SU_FASS_WP.2012.18910

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This study argues that Nash equilibria with less variations in players' best responses are more appealing. To that regard, a notion measuring such variations, the entropic selection of Nash equilibrium, is presented: For any given Nash equilibrium, we consider the cardinality of the support of a player's best response against others' strategies that are sufficiently close to the behavior specified. These cardinalities across players are then aggregated with a real-valued function on whose form we impose no restrictions apart from the natural limitation to nondecreasingness in order to obtain equilibria with less variations. We prove that the entropic selection of Nash equilibrium is non-empty and admit desirable properties. Some well-known games, each of which display important insights about virtues / problems of various equilibrium notions, are considered; and, in all of these games our notion displays none of the criticisms associated with these examples. These examples also show that our notion does not have any containment relations with other associated and well-known refinements, perfection, properness and persistence.
Item Type: Working Paper / Technical Report
Uncontrolled Keywords: Entropy; Entropic Selection of Nash Equilibrium; Refinements of Nash Equilibrium
Subjects: H Social Sciences > HB Economic Theory > HB135-147 Mathematical economics. Quantitative methods
H Social Sciences > HB Economic Theory
Divisions: Faculty of Arts and Social Sciences > Academic programs > Economics
Faculty of Arts and Social Sciences
Depositing User: Mehmet Barlo
Date Deposited: 10 Apr 2012 15:06
Last Modified: 26 Apr 2022 10:50
URI: https://research.sabanciuniv.edu/id/eprint/18910

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