We discuss a number of conceptual issues that arise in attempting to capture, in dynamic games, the notion that there is "common understanding" among the players that they are all rational.

In the case of natural duopoly, we suggest a finitely repeated game between two incumbent firms and a potential entrant that limits the incumbent firms' power and compels them to approach economic efficiency. We prove that such a game admits a perfect subgame equilibrium along which the...

Constructing a dynamic game model of trade of an exhaustible resource, this paper compares feedback Nash and Stackelberg equilibria. We consider two different leadership scenarios: leadership by the importing country, and leadership by the exporting country. We numerically show that as compared...

We present a family of tractable dynamic global games and its applications. Agents privately learn about a fixed fundamental, and repeatedly adjust their investments while facing frictions. The game exhibits many externalities: payoffs may depend on the volume of investment, on its volatility,...

We investigate the extension of backward-induction to von Neumann extensive games (where information sets have a synchronous structure) and provide an epistemic characterization of it. Extensions of the idea of backward-induction were proposed by Penta (2009) and later by Perea (2013), who also...