Algorithms for cautious reasoning in games

Geir B. Asheim, Oslo University


We provide comparable algorithms for the Dekel-Fudenberg procedure, iterated admissibility and proper rationalizability by means of the concepts of preference restrictions and likelihood orderings. We apply the algorithms for comparing iterated admissibility and proper rationalizability, and provide a sufficient condition under which iterated admissibility does not rule out properly rationalizable strategies. Finally, we use the algorithms to examine an economically relevant strategic situation, namely a bilateral commitment bargaining game.