AGM Belief Revision in Dynamic Games

Within the context of extensive-form (or dynamic) games, we use choice frames to represent the initial beliefs of a player as well as her disposition to change those beliefs when she learns that an information set of hers has been reached. As shown in [5], in order for the revision operation to be consistent with the AGM postulates [1], the player’s choice frame must be rationalizable in terms of a total pre-order on the set of histories. We consider four properties of choice frames and show that, together with the hypothesis of a common prior, are necessary and sufficient for the existence of a plausibility order that rationalizes the epistemic state (that is, initial beliefs and disposition to revise those beliefs) of all the players. The plausibility order satisfies the properties introduced in [6] as part of a new definition of perfect Bayesian equilibrium for dynamic games. Thus the present paper provides epistemic foundations for that solution concept.
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