Characterizing Assumption of Rationality by Incomplete Information

Abstract

We characterize common assumption of rationality of 2-person games within an incomplete information framework. We use the lexicographic model with incomplete information and show that a belief hierarchy expresses common assumption of rationality within a complete information framework if and only if there is a belief hierarchy within the corresponding incomplete information framework that expresses common full belief in caution, rationality, every good choice is supported, and prior belief in the original utility functions.