Theoretical Economics, Volume 9, Number 3 ( 2014)

Theoretical Economics 9 (2014), 555–582

Refinements of Nash equilibrium in potential games

Oriol Carbonell-Nicolau, Richard McLean


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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