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Weak dominance: A mystery cracked

31 May 2016 at 12:00 PM - 1:00 PM

Room 207, Campus on Viale Romania, 32

Speaker: Dov Samet, Tel Aviv University

Abstract: What strategy profiles can be played when it is common knowledge that weakly dominated strategies are not played? A comparison to the case of strongly dominated strategy is in order. A common informal argument shows that if it is common knowledge that players do not play strongly dominated strategies then players can play only profiles that survive the iterative elimination of strongly dominated strategies. We formalize and prove this claim.

However, the analogous claim for the case of weak dominance does not hold. We show that common knowledge that players do not play weakly dominated strategies implies that they must play profiles that survive an iterative elimination of profiles, called flaws of weakly dominated strategies, a process described by Stalnaker (1994). The iterative elimination of flaws of strongly dominated strategies results in the same set of profiles as the iterative elimination of strongly dominated strategies. Thus, the case of weak dominance and strong dominance are completely analogous: Common knowledge that players do not play weakly, or strongly dominated strategies implies iterative elimination of flaws of weakly, or strongly dominated strategies, correspondingly.

These processes, for both weak and strong dominance, are independent of the order of elimination.
Here are two links to papers that are relevant to the talk:

http://www.tau.ac.il/~samet/papers/weak.pdf

http://www.tau.ac.il/~samet/papers/npce.pdf