Strengthening Nash Equilibria
Abstract
Nash equilibrium is often heralded as a guiding principle for rational decision-making in strategic interactions. However, it is well-known that Nash equilibrium sometimes fails as a reliable predictor of outcomes, with two of the most notable issues being the fact that it is not resilient to collusion and that there may be multiple Nash equilibria in a single game. In this paper, we show that a mechanism designer can get around these two issues for free by expanding the action sets of the original game. More precisely, given a normal-form or Bayesian game and a Nash equilibrium in , a mechanism designer can construct a new game by expanding the action set of each player and defining appropriate utilities in the action profiles that were not already in the original game. We show that the designer can construct in such a way that (a) is a semi-strong Nash equilibrium of , and (b) Pareto-dominates or quasi Pareto-dominates all other Nash equilibria of .
Keywords
Cite
@article{arxiv.2312.14745,
title = {Strengthening Nash Equilibria},
author = {Ivan Geffner and Moshe Tennenholtz},
journal= {arXiv preprint arXiv:2312.14745},
year = {2023}
}
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29 pages