Earlier contributions have shown that imposing common knowledge of rationality is problematic when rationality is defined as choosing an admissible best response. Here we instead impose common knowledge of rational reasoning and define the concept of rationalizable sets. General existence (for...

A troubling aspect about power indices is how the values assigned to players can depend upon the index. As shown, the problem is more severe; different indices can generate radically different rankings; e.g., a 15-player game exists with over a trillion different strict power index rankings of...

An example shows that there are well-behaved infinte signaling games with no sequential equilibria. We explore the relationship between equilibrium outcomes of the infinite game and those of approximating games. Consider a sequence of signaling games approaching a limit game. A "(sub)sequence of...

It is commonly argues that reducing the number of hours worked by the employed would lead to lower unemployment, since firms will respond by hiring more workers. This paper examines the relationship between hours worked and unemployment, in the context of an efficiency wage model where...