Solutions of strategic games under common belief of sure-thing principle

Abstract

In this paper we address the issue which solution concept for strategic games is consistent to common belief that each player satisfies the sure-thing principle. Traditional epistemic analysis takes for granted that there is common belief that each player acts according to some expected utility function. Because our presumptions are milder than the traditional ones we are forced to modify the traditional epistemic approach and follow the idea of Morris (1996) to fasten the beliefs of the players to their preferences. One central finding of our paper is that common belief of sure-thing principle plus state-independence characterizes the solution concept proposed by Börgers (1993).