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Signaling Games and Stable Equilibria

In-Koo Cho¹; David M. Kreps²

¹ University of Chicago · ² Stanford University

Games in which one party conveys private information to a second through messages typically admit large numbers of sequential equilibria, as the second party may entertain a wealth of beliefs in response to out-of-equilibrium messages. By restricting those out-of-equilibrium beliefs, one can sometimes eliminate many unintuitive equilibria. We present a number of formal restrictions of this sort, investigate their behavior in specific examples, and relate these restrictions to Kohlberg and Mertens' notion of stability.

DOI

10.2307/1885060

Volume

102 (2)

Pages

179

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