Econometrica: Jul 2012, Volume 80, Issue 4
Axiomatic Equilibrium Selection for Generic Two‐Player Games
Srihari Govindan, Robert WilsonFor a finite game with perfect recall, a refinement of its set of Nash equilibria selects closed connected subsets, called solutions. Assume that each solution's equilibria use undominated strategies and some of its equilibria are quasi‐perfect, and that all solutions are immune to presentation effects; namely, if the game is embedded in a larger game with more pure strategies and more players such that the original players' feasible mixed strategies and expected payoffs are preserved regardless of what other players do, then the larger game's solutions project to the original game's solutions. Then, for a game with two players and generic payoffs, each solution is an essential component of the set of equilibria that use undominated strategies, and thus a stable set of equilibria as defined by Mertens (1989).
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