The Kreps-Wilson monopoly-entrant game and cautiously rationalizable sequential equilibria

✍ Scribed by Manfred J. Holler

• Book ID: 104637670
• Publisher: Springer Netherlands
• Year: 1991
• Tongue: English
• Weight: 822 KB
• Volume: 25
• Category: Article
• ISSN: 0033-5177
• DOI: 10.1007/bf00138757

✦ Synopsis

In this paper, the Kreps-Wilson monopoly-entrant game will be reconstructed in order to make the underlying concepts and the strain of reasoning amenable to a general discussions. It is shown that for the derived sequential equilibrium on incentive problem for the players exits, inasmuch as it contains mixed strategies and equilibrium payoffs are equal to maximin, and that the consequences of a variation of payoffs with respect to equilibrium behavior are counter-intuitive for a large range of parameters of the payoff matrix. To conclude, the concept of cautiously rationalizable sequential equilibrium is suggested.