Sequential and quasi-perfect rationalizability in extensive games

Within an epistemic model for two-player extensive games, we formalize the event that each player believes that his opponent chooses rationally at all information sets. Letting this event be common certain belief yields the concept of sequential rationalizability. Adding preference for cautious behavior to this event likewise yields the concept of quasi-perfect rationalizability. These concepts are shown to (a) imply backward induction in generic perfect information games, and (b) be non-equilibrium analogues to sequential and quasi-perfect equilibrium, leading to epistemic characterizations of the latter concepts. Conditional beliefs are described by the novel concept of a system of conditional lexicographic probabilities.  2004 Elsevier Inc. All rights reserved. JEL classification: C72