Kalaba, Robert E.; Spingarn, K.; Tesfatsion, Leigh

Journal of Optimization Theory and Applications Vol. 37 (1982): 379-385.

In the absence of contrary information, it would seem prudent for a competitor to attribute to his opponents the same level of rationality that he himself employs. In the context of a general linear-quadratic nonzero-sum two-person game, it is shown that a counterplanning procedure consistent with this principle of symmetrical rationality always converges to the unique Nash equilibrium for the game. Annotated pointers to related work can be accessed here: http://www.econ.iastate.edu/tesfatsi/vita.home#Game

JEL Classification: C6, C7

Keywords: Nonzero-sum two-person game, symmetrical rationality