Solution Concept - Rationalizability and Iterated Dominance

Rationalizability and Iterated Dominance

In this solution concept, players are assumed to be rational and so strictly dominated strategies are eliminated from the set of strategies that might feasibly be played. A strategy is strictly dominated when there is some other strategy available to the player that always has a higher payoff, regardless of the strategies that the other players choose. (Strictly dominated strategies are also important in minimax game-tree search.) For example, in the (single period) prisoners' dilemma (shown below), cooperate is strictly dominated by defect for both players because either player is always better off playing defect, regardless of what his opponent does.