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Abstract:
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We explore the identification power that equilibrium assumptions provide. In particular, we explore the identified features of a game when we drop the assumption that the players are playing Nash equilibrium. Instead, we assume the players are rational. Rationality has been widely studied in the game theory literature, and in this paper, we adopt the rationalizability concept of Pearce and Bernheim. Here, we are able to examine the identification power of several layers of rational play in three games. In the first, we compare the identification power of rationality in bivariate discrete games with complete information to ones where equilibrium is imposed. We then examine games with incomplete information and characterize there the identification features of equilibrium. Finally, we examine the identification power in an independent private value auction.
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