A NEW THEORY OF EQUILIBRIUM SELECTION FOR GAMES WITH COMPLETE INFORMATION

This paper proposes a new one-point solution concept for noncooperative games, based on a new theory of equilibrium selection. It suggests a mathematical model for measuring the strength of the incentive each player has to use any particular strategy, and then for using these incentive measures to estimate the theoretical probability for any given Nash equilibrium to emerge as the outcome of the game. The solution of the game is then defined as the Nash equilibrium with the highest theoretical probability when this equilibrium is unique. The problems posed by nonuniqueness are also discussed. (C) 1995 Academic Press, Inc.