Econometrica: May, 1993, Volume 61, Issue 3

Self-Confirming Equilibrium

https://doi.org/0012-9682(199305)61:3<523:SE>2.0.CO;2-I
p. 523-545

David K. Levine, Drew Fudenberg

In a self-confirming equilibrium, each player's strategy is a best response to his beliefs about the play of his opponents, and each player's beliefs are correct along the equilibrium path of play. Thus, if a self-confirming equilibrium occurs repeatedly, no player ever observes play that contradicts his beliefs, even though beliefs about play at off-path information sets need not be correct. We characterize the ways in which self-confirming equilibria and Nash equilibria can differ, and provide conditions under which self-confirming equilibria correspond to standard solution concepts.