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A note on the E-mail game: Bounded rationality and induction

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  • Dulleck, Uwe

Abstract

In Rubinstein's (1989) E-mail game there exists no Nash equilibrium where players use strategies that condition on the E-mail communication. In this paper I restrict the utilizable information for one player. I show that in contrast to Rubinstein's result, in a payoff dominant Nash equilibrium players use strategies that condition on the number of messages sent. Therefore - induction under the assumption of bounded rational behavior of at least one player leads to a more intuitive equilibrium in the E-mail game.

Suggested Citation

  • Dulleck, Uwe, 1997. "A note on the E-mail game: Bounded rationality and induction," SFB 373 Discussion Papers 1997,47, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    • Handle: RePEc:zbw:sfb373:199747
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    References listed on IDEAS

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    1. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-836, July.
    2. Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-391, June.
    3. Rosenthal, Robert W., 1981. "Games of perfect information, predatory pricing and the chain-store paradox," Journal of Economic Theory, Elsevier, vol. 25(1), pages 92-100, August.
    4. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, April.
    5. Aumann, Robert J. & Hart, Sergiu & Perry, Motty, 1997. "The Absent-Minded Driver," Games and Economic Behavior, Elsevier, vol. 20(1), pages 102-116, July.
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    Cited by:

    1. Koessler, Frederic, 2001. "Common knowledge and consensus with noisy communication," Mathematical Social Sciences, Elsevier, vol. 42(2), pages 139-159, September.

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    More about this item

    Keywords

    Induction; Subgame Perfect Equilibrium; Information sets; Imperfect recall;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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