Characterizing permissibility, proper rationalizability, and iterated admissibility by incomplete information

Abstract

We characterize three interrelated solution concepts in epistemic game theory: permissibility, proper rationalizability, and iterated admissibility. We define the lexicographic epistemic model in a framework with incomplete information. Based on it, we give two groups of conditions; one characterizes permissibility and proper rationalizability, the other characterizes permissibility in an alternative way and iterated admissibility. In each group, the conditions for the latter are stronger than those for the former, which corresponds to the fact that proper rationalizability and iterated admissibility are incomparable but compatible refinements of permissibility within the complete information framework. The essential difference between the two groups is whether a full belief of rationality is needed.