Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 605: Strategic equivalence and bounded rationality in extensive form games

Mark Voorneveld () and Helena Fagraeus Lundström
Additional contact information
Mark Voorneveld: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Helena Fagraeus Lundström: Dept. of Mathematics, Royal Institute of Technology, Stockholm, Sweden

Abstract: In a large family of solution concepts for boundedly rational players --- allowing players to be imperfect optimizers, but requiring that ``better'' responses are chosen with probabilities at least as high as those of ``worse'' responses --- most of Thompson's ``inessential'' transformations for the strategic equivalence of extensive form games become far from inconsequential. Only two of the usual elementary transformations remain truly inessential: the interchange of moves, and replacing a final move by nature by simply taking expected payoffs.

Keywords: Extensive form games; Quantal response equilibrium; Logit model; Strategic equivalence

JEL-codes: C72

15 pages, October 13, 2005

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