Rationality and coherent theories of strategic behavior

A non-equilibrium model of rational strategic behavior that can be viewed as a refinement of (normal form) rationalizability is developed for both normal form and extensive form games. This solution concept is called a tau-theory and is used to analyze the main concerns of the Nash equilibrium refinements literature such as dominance, iterative dominance, extensive form rationality, invariance, and backward induction. The relationship between tau-theories and dynamic learning is investigated. Journal of Economic Literature Classification Number: C72. (C) 1996 Academic Press. inc.