## Abstract

A traditional assumption in game theory is that players are opaque to one another - if a player changes strategies, then this change in strategies does not affect the choice of other players' strategies. In many situations this is an unrealistic assumption. We develop a framework for reasoning about games where the players may be translucent to one another; in particular, a player may believe that if she were to change strategies, then the other player would also change strategies. Translucent players may achieve significantly more efficient outcomes than opaque ones. Our main result is a characterization of strategies consistent with appropriate analogues of common belief of rationality. Common Counterfactual Belief of Rationality (CCBR) holds if (1) everyone is rational, (2) everyone counterfactually believes that everyone else is rational (i.e., all players i believe that everyone else would still be rational even if i were to switch strategies), (3) everyone counterfactually believes that everyone else is rational, and counterfactually believes that everyone else is rational, and so on. CCBR characterizes the set of strategies surviving iterated removal of minimax dominated strategies: a strategy σ_{i} is minimax dominated for i if there exists a strategy σ'_{i} for i such that min_{μ'-r} μi (σ_{i}, μ'-i) > max_{μ-r} ui(σ_{i}, μ-i).

Original language | English |
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Title of host publication | Proceedings of the 14th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2013 |

Editors | Burkhard C. Schipper |

Publisher | Institute of Mathematical Sciences |

Pages | 216-221 |

Number of pages | 6 |

ISBN (Electronic) | 9780615747163 |

State | Published - 2013 |

Externally published | Yes |

Event | 14th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2013 - Chennai, India Duration: 7 Jan 2013 → 9 Jan 2013 |

### Publication series

Name | Proceedings of the 14th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2013 |
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### Conference

Conference | 14th Conference on Theoretical Aspects of Rationality and Knowledge, TARK 2013 |
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Country/Territory | India |

City | Chennai |

Period | 7/01/13 → 9/01/13 |

### Funding

Funders | Funder number |
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Alfred P. Sloan Fellowship | |

National Science Foundation | CCF-1214844, IIS-0911036, IIS-0812045 |

Air Force Office of Scientific Research | FA9550-08-1-0266 |

Army Research Office | W911NF-09-1-0281 |

Defense Advanced Research Projects Agency | |

Alfred P. Sloan Foundation | |

Microsoft | CCF-0746990, CNS-1217821, FA9550-10-1-0093 |

Air Force Research Laboratory | FA8750-11-2-0211 |

## Keywords

- Counterfactuals
- Epistemic logic
- Rationality