Publication
The Korean Economic Review
Logit Solution and Equilibrium Selection in Two-Person Games
Kang-Oh Yi (Sogang University)Year 2009Vol. 25No. 2
Abstract
This paper studies the properties of logit solution as a limit of logit equilibrium, where mistake probabilities depend in plausible ways on their expected costs. This dependence sometimes allows logit solution to select an equilibrium that differs from the risk-dominant equilibrium in 2 ×2 games.This paper also identifies a sufficient condition for logit solution to follow risk-dominance in 2 ×2 games.