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Sequentially Stable Outcomes

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  • Francesc Dilmé

Abstract

This paper introduces and analyzes sequentially stable outcomes in extensive-form games. An outcome ω is sequentially stable if, for any ǫ >0 and any small enough perturbation of the players’ behavior, there is an ǫ-perturbation of the players’ payoffs and a corresponding equilibrium with outcome close to ω. Sequentially stable outcomes exist for all finite games and are outcomes of sequential equilibria. They are closely related to stable sets of equilibria and satisfy versions of forward induction, iterated strict equilibrium dominance, and invariance to simultaneous moves. In signaling games, sequentially stable outcomes pass the standard selection criteria, and when payoffs are generic, they coincide with outcomes of stable sets of equilibria.

Suggested Citation

  • Francesc Dilmé, 2024. "Sequentially Stable Outcomes," CRC TR 224 Discussion Paper Series crctr224_2024_511, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2024_511
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp511
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    References listed on IDEAS

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    More about this item

    Keywords

    Sequentially stability; stable outcome; signaling games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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