Ideal reactive equilibrium

Abstract

Refinements of the Nash equilibrium have followed the strategy of extending the idea of subgame perfection to incomplete information games. This has been achieved by appropriately restricting beliefs at unreached information sets. Each new refinement gives stricter and more mathematically-complicated limitations on permitted beliefs. A simpler approach is taken here, where the whole idea of beliefs is dispensed with, and a new equilibrium concept, called the ideal reactive equilibrium, that builds on some pioneering work by Amershi, Sadanand and Sadanand on thought process dynamics, is developed.