Weakly rational expectations

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Abstract

Aumann and Drèze (2008) characterised the set of interim expected payoffs that players may have in rational belief systems, in which there is common knowledge of rationality and a common prior. We show here that common knowledge of rationality is not needed: when rationality is satisfied in the support of an action-consistent distribution (a concept introduced by Barelli (2009)), one obtains exactly the same set of rational expectations, despite the fact that in such 'weakly rational belief systems' there may not be mutual knowledge of rationality, let alone common knowledge of rationality. In the special case of two-player zero-sum games, the only expected payoff is the minmax value, even under these weak assumptions.

Original languageEnglish
Pages (from-to)496-500
Number of pages5
JournalJournal of Mathematical Economics
Volume49
Issue number6
DOIs
StatePublished - Dec 2013

Keywords

  • Common knowledge
  • Epistemic game theory
  • Pairwise action-consistency
  • Rational expectations
  • Rationality

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