RATIONALITY AND COHERENT THEORIES OF STRATEGIC BEHAVIOR

A non-equilibrium model of rational strategic behavior that can be vie wed as a refinement of (normal form) rationalizability is developed fo r both normal form and extensive form games. This solution concept is called a tau-theory and is used to analyze the main concerns of the Na sh equilibrium refinements literature such as dominance, iterative dom inance, extensive form rationality, invariance, and backward induction . The relationship between tau-theories and dynamic learning is invest igated. Journal of Economic Literature Classification Number: C72. (C) 1996 Academic Press. inc.