An Epistemic Characterisation of Extensive Form Rationalisability
01.01.1999
Marciano Siniscalchi, Pierpaolo Battigalli
Economy and Society
We use an extensive form, universal type space to provide the following epistemic characterisation of extensive form rationalisability. Say that player i strongly believes event E if i is certain of E conditional on each of her information sets consistent with E. Our main contribution is to show that a strategy profile s is extensive form rationalisable if and only if there is a state in which s is played and (0) everybody is rational, (1) everybody strongly believes (0), (2) everybody strongly believes (0) & (1), (3) everybody strongly believes (0) & (1) & (2), …. This result also allows us to provide sufficient epistemic conditions for the backward induction outcome and to relate extensive form rationalisability and conditional common certainty of rationality.