Perfect Bayesian Equilibrium
The equilibrium concept that is relevant for signaling games is Perfect Bayesian equilibrium. Perfect Bayesian equilibrium is a refinement of Bayesian Nash equilibrium, which is an extension of Nash equilibrium to games of incomplete information. Perfect Bayesian equilibrium is the equilibrium concept relevant for dynamic games of incomplete information.
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Famous quotes containing the words perfect and/or equilibrium:
“It’s a perfect night for mystery and horror. The air itself is filled with monsters.”
—William Hurlbut (1883–?)
“They who feel cannot keep their minds in the equilibrium of a pair of scales: fear and hope have no equiponderant weights.”
—Horace Walpole (1717–1797)