Abstract. Epistemic game theory has shown the importance of informational contexts in understanding strategic interaction. We propose a general framework to analyze how such contexts may arise. The idea is to view informational contexts as the fixed-points of iterated, "rational responses" to incoming information about the agents' possible choices. We show general conditions for the stabilization of such sequences of rational responses, in terms of structural properties of both the decision rule and the information update policy.
Background and MotivationAn increasingly popular 3 view is that "the fundamental insight of game theory [is] that a rational player must take into account that the players reason about each other in deciding how to play" [6, pg. 81]. Exactly how the players (should) incorporate the fact that they are interacting with other (actively reasoning) agents into their own decision making process is the subject of much debate. A variety of frameworks explicitly model the reasoning of rational agents in a strategic situation. Key examples include Brian Skyrms' models of "dynamic deliberation" [32], Ken Binmore's analysis of "eductive reasoning" [11], and Robin Cubitt and Robert Sugden's "common modes of reasoning" [17]. Although the details of these frameworks are quite different they share a common line of thought: In contrast to classical game theory, solution concepts are no longer the basic object of study. Instead, the "rational solutions" of a game are the result of individual (rational) decisions in specific informational "contexts".This perspective on the foundations of game theory is best exemplified by the so-called epistemic program in game theory (cf. [15]). The central thesis here is that the basic mathematical model of a game should include an explicit parameter describing the players' informational attitudes. However, this broadly decision-theoretic stance does not simply reduce the question of decision-making in interaction to that of rational decision making in the face of uncertainty or ignorance. Crucially, higher-order information (belief about beliefs, etc.)