ECON 4180 Lecture 4: EC4180S16_L4
28 Mar 2016
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Document Summary
Practically, we nd the best response(s) by starting the best responses to the simplest beliefs such as the pure strategies (assigning probability one to a particular one strategy). Then, we move on checking the best responses by a mixed strategy. Sometimes, this procedure may involve some tedious calculation in some cases. Particularly, examine what belief 2 would support z 2 b1. Also, note that for each of rationalizable strategies, a player can construct a chain of justi cation for his choice. It means that any choice is justi ed by another player"s choice that is not a never a best response. if there is no such a chain of justi cation, then it is not a rationalizable strategy. Recall that we studied so-called iterative removal (or deletion) of strictly dominate strategy (or iterated dominance, for short). We delete one domi- nated strategy for one player, and then make the reduced game r1.
