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Self-Confirming Equilibrium

Drew Fudenberg
David K. Levine

Abstract

In a self-confirming equilibrium, each player's strategy is a best response to his beliefs about the play of his opponents, and each player's beliefs are correct along the equilibrium path of play. Thus, if a self-confirming equilibrium occurs repeatedly, no player ever observes play that contradicts his beliefs, even though beliefs about play at off-path information sets need not be correct. We characterize the ways in which self-confirming equilibria and Nash equilibria can differ, and provide conditions under which self-confirming equilibria correspond to standard solution concepts.