SFB 303 Discussion Paper No. A - 304

Author: Nöldeke, Georg, and Eric van Damme
Title: Switching Away From Probability One Beliefs
Abstract: This paper considers a class of repeated signalling games to gain some intuitive insights into the effects and the desirability of modelling players in a dynamic game of incomplete information as being obstinate in the sense that their beliefs satisfy a support restriction. We demonstrate that such a restriction is rather dubious on a-priori grounds and in general imposes "too much" pooling on sequential equilibrium outcomes. Equilibria violating a support restriction should therefore not be dismissed in dynamic models of incomplete information and may actually reflect the possibility of reputation effects present in such a setting.
Creation-Date: July 1990
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