Pairwise epistemic conditions for Nash equilibrium

Bach, C. W. and Tsakas, E. (2014) Pairwise epistemic conditions for Nash equilibrium. Games and Economic Behavior, 85. pp. 48-59. ISSN 0899-8256 doi: 10.1016/j.geb.2014.01.017

Abstract/Summary

We introduce a framework for modeling pairwise interactive beliefs and provide an epistemic foundation for Nash equilibrium in terms of pairwise epistemic conditions locally imposed on only some pairs of players. Our main result considerably weakens not only the standard sufficient conditions by Aumann and Brandenburger (1995), but also the subsequent generalization by Barelli (2009). Surprisingly, our conditions do not require nor imply mutual belief in rationality.