Abstract:

There are two well-known sufficient conditions for Nash equilibrium in two-player games: mutual knowledge of rationality (MKR) and mutual knowledge of conjectures. MKR assumes that the concept of rationality is mutually known. In contrast, mutual knowledge of conjectures assumes that a given profile of conjectures is mutually known, which has long been recognized as a strong assumption. In this note, we introduce a notion of "mutual assumption of rationality and correctness" (MARC), which conceptually aligns more closely with the MKR assumption. We present two main results. Our first result establishes that MARC holds in every two-person zero-sum game. In our second theorem, we show that MARC does not in general hold in n-player games.

Location:

ENS Paris-Saclay
4, avenue des Sciences, 91190, Gif-sur-Yvette