Theoretical Economics 9 (2014), 555–582
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Refinements of Nash equilibrium in potential games
Oriol Carbonell-Nicolau, Richard McLean
Abstract
We prove the existence of a pure-strategy trembling-hand perfect equilibrium in upper semicontinuous potential games, and we show that generic potential games possess pure-strategy strictly perfect and essential equilibria. We also establish a more powerful result: the set of maximizers of an upper semicontinuous potential contains a strategically stable set of pure-strategy Nash equilibria.
Keywords: Discontinuous game, potential game, trembling-hand perfect equilibrium, stable set, essential equilibrium
JEL classification: C72
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