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Universit`a Commerciale Luigi Bocconi

Graduate School
Master of Science in Economics and Social Sciences
Equivalent Extensive Form Games
Advisor: prof. Pierpaolo Battigalli
Discussant: prof. Fabio Angelo Maccheroni
Master of Science Thesis of: Paolo Leonetti
Student ID: 1302108
Academic year: 2013-2014
Ringraziamenti
Ho iniziato questo lavoro un anno fa, cercando di scrivere qualcosa di originale, e nalmente
ce lho fatta. Questa tesi segna la ne di anni di studio, forse anche dei miei anni migliori; e
mi sembra giusto ringraziare le tante persone che ho incrociato lungo questo percorso perch`e,
se sono arrivato qui, `e soprattutto merito loro.
Il grazie pi` u grande va a mamma e pap` a. Non perch`e si deve fare cos`. Ma per avermi
incoraggiato nei momenti peggiori, e creduto in me, anche quando non ci avrei creduto
neanche io. Se `e vero che buon sangue non mente, da grande voglio diventare come te, pap`a.
E grazie a Marco, per riuscire sempre una trovare una soluzione e stare simpatico a tutti.
Non potrei avere un fratello migliore.
Grazie al prof. Pierpaolo Battigalli, che mi ha seguito in questi due anni, per aver avuto
tanta pazienza nel correggere i miei errori. Non mi riferisco a quelli della tesi, dove alla ne
ho fatto un po di testa mia, al solito. Ma per avermi fatto capire che la correttezza delle
idee di fondo `e pi` u importante di ci` o che rimane. E per i tanti pomeriggi passati a spiegarmi
in dettaglio il perch`e delle cose da fare, per averci tenuto davvero ad insegnarmi qualcosa.
Grazie al prof. Fabio Maccheroni, per essere sempre stato sempre disponibile con me, ed
aver tolto tempo prezioso alle sue attivit` a per seguirmi, forse perch`e ha davvero creduto che
sarei stato capace di fare qualcosa. Per avermi trattato alla pari, ed avermi sempre lasciato
lultima parola su cosa scegliere. Tra le tante persone che hanno contribuito alla realizzazione
di questa tesi, ci tengo a ringraziare Marco Golla, Alistair Isaac e il prof. Klaus Ritzberger.
Grazie ad Alessio per essere sempre daccordo con me, per le serate al Gelatiere, e per
cercare di organizzare i miei programmi, anche quando non vanno come previsto; e a Matteo,
che ha interessi opposti ai miei: sar` a questa la parte interessante. Grazie a Veronica, per
essere stata sempre simpatica e sorridente, e trovare le parole giuste quando cera bisogno.
Grazie a Ugo e a Saverio per non esserci persi di vista, anche a distanza. Grazie a Cristina,
per essermi stata a sentire parecchie volte, soprattutto le battute idiote.
Un ringraziamento particolare alla prof.ssa Carmen Gimenez, per la disponibilit` a mostrata
in quellultimo esame di spagnolo, e a Salvatore Tring ali e Pierfrancesco Carlucci, dai quali
ho imparato tanto negli ultimi anni, e spero altrettanto nei prossimi. Forse `e qui che inizia
la parte dicile.. o quella pi` u divertente, sar` a il tempo a dirlo.
Grazie di cuore
Contents
1 Preliminaries 1
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Literature review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2 Extensive Form Games 6
2.1 Possibly innite trees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Active players and available actions . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Information sets partitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.4 :-reduced normal forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3 A characterization of Behavioral Equivalence 40
3.1 The set of Invariant transformations . . . . . . . . . . . . . . . . . . . . . . . 40
3.2 Necessary and sucient conditions . . . . . . . . . . . . . . . . . . . . . . . 46
3.3 Extension to chance moves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4 Invariance of Solution Concepts 62
4.1 Renements of equilibrium concepts . . . . . . . . . . . . . . . . . . . . . . . 63
4.2 Rationalizability in extensive form games . . . . . . . . . . . . . . . . . . . . 73
5 Closing Remarks 79
Bibliography 83
The ideas which are here expressed so
laboriously are extremely simple and should be obvious.
John Maynard Keynes.
Strategies cannot be chosen.
Pierpaolo Battigalli.
CHAPTER 1
Preliminaries
1.1 Introduction
In the context of non-cooperative game theory, where players make decisions independently,
two dierent representations, together with their variants, have been widely used to describe
interactions in dynamic games: the extensive form and the normal form. The main
dierence is that the former provides a richer structure, specifying the information available
to each active player and making explicit the order of moves: it assigns a kind of value to
the temporal variable. It does not happen in the normal form representation, since it seems
that each player chooses instantaneously his strategy, that is the prole of actions he would
take whenever he could have the possibility to do it.
The problem is that there exist situations where the richer information structure of the
extensive form can be considered redundant from some point of view, as in the case of
dynamic games where some players have to choose their moves, one by one,
1
and ignoring all
1
In Chapter 2, it will be developed a more general framework where at each non-terminal node of the
tree, one or more players may choose simultaneously their actions. The underlying motivation is twofold: on
the one hand, the normal form representation contains too little information, in the sense that no value is
assigned to time; on the other hand, the common extensive form representation where there is exactly one
active player at each non-terminal node contains too much information, since it would like to model situations
2 Chapter 1. Preliminaries
previous actions chosen by their opponents. Although the order of playing may not matter,
e.g. from some solution mode perspective, the extensive form representation requires its
specication. Nevertheless, there is no representation which is actually better than the other
one: If all dynamic games are going to be represented with their normal forms, then every
situation will look like a simultaneous moves game. That is why, a coherent theory should
explicitly highlight the connections between these two (classes of) representations. The main
question is, indeed, to provide a characterization of behavioral equivalence between possibly
innite extensive form games with imperfect information. In rough words, to characterize
all the situations where two extensive form games are essentially the same. It will be shown
that the (reduced) normal form and well-dened transformations of the extensive form can
represent in the last instance the same game structures: the underlying motivation of this
work comes from logic. In particular, it means that the focus is not related to strategic
considerations or to players rationality, but to the descriptive component of the theory of
non-cooperative games: the rules of the game.
Let us make an example to make the intuition clear: a player A is allowed to play games
and
t
which are represented in their extensive form in Figure 1.1.
A
z
1
z
2
z
3
x
a

A
z
1 A
z
2
z
3
x y
a
b
Figure 1.1: Extensive form games and
t
.
Here Z = z
1
, z
2
, z
3
stands for the set of terminal nodes; it means that not only the
preference relations of the players over Z are not specied, but also that these game structures
do not explicit the consequence functions, which represent the consequences associated to
where some ordered sequences of moves have to be treated as chosen in a simultaneous moves game. The
trick of the main result is basically to consider extensive forms as if the temporal variable loses its value,
allowing to regroup players as much as possible, until a kind of minimal extensive form is reached.
1.2. Literature review 3
each terminal node.
2
Assuming that player A knows ex-ante the extensive forms and
t
in Figure 1.1, he realizes that these game structures are representing essentially the same
situation, except for the fact that in the game
t
he needs to choose two consecutive actions
to reach the terminal nodes z
2
or z
3
. Notice that such observation has nothing to do with
the rationality of the player A. Additionally, an extensive form game does not have to be
necessarily a perfect information game: not all active players have to be always informed
about previous moves of their opponents, including the realizations of the chance player,
according to the rules of the game.
The plan of the thesis is as follows: after this rather informal introduction about the
underlying motivation, the Chapter ends with a survey of relevant works in literature which
are related to the game equivalence theme. Chapter 2 provides basic notations and the
theoretical framework for a rigorous denition of and extensive form game and related
:-reduced normal form, where : stands for the set of terminal paths. In the spirit of
the original work of Thompson (1952), the characterization of behavioral equivalence is
presented in Chapter 3; the result is then extended to extensive form games which allow
chance moves. Finally, the invariance of known solution concepts, such as some variants of
Sequential Equilibrium and extensive form rationalizability, with respect to these invariant
transformations will be analyzed in Chapter 4. Conclusions and closing remarks follow.
1.2 Literature review
There is surprisingly little work on the topic of game equivalence. Being on a theoretical
side, part of the problem is the tendency to search for the correct notion of equivalence,
as opposed to looking for many of them and what exactly is exactly kept invariant in each
case. The starting point of this line of research comes back to Thompson (1952): here
the author denes four transformations such that they preserve the strategic features of the
game structures, to mean that the reduced normal forms are essentially kept invariant. Then,
relying on the simplication of Krentel et al. (1952) and the extensive model proposed by
Kuhn (1950), he proves that two game structures share the same reduced normal form,
2
More precisely, a consequence function is a map g : Z C, where C is a set of potential consequences.
It can be assumed without loss of generality that g is surjective, that is g(Z) = C. The same cannot be said
about injectivity: it can be the case that there exist z, z

Z such that g(z) = g(z

) or, equivalently, g
1
could be not represented as a function.
4 Chapter 1. Preliminaries
up to relabellings, if and only if the extensive form representation of each one can be
transformed into the other one through a nite number of applications
3
of his transformations.
These basic transformations are commonly known as Interchanging of Simultaneous Moves,
Coalescing Moves / Sequential Agent Splitting, Addition of a Superuous Move and
Ination / Deation. Contributions and extensions can be found sporadically throughout
the literature. A preliminary survey on these so-called adequacy theorems can be found
in (de Bruin, 1999). In particular, Kohlberg and Mertens (1986) extend the result to games
allowing chance players, proposing two additional game transformations, which are modied
versions of Coalescing Moves and Addition of Superuous Moves for the chance players.
Moreover, they argue that all the strategic features are unchanged through the application
of these transformations. Some years later, Elmes and Reny (1994) point out that if it is
really the case then the analysis of the strategic interactions should be restricted only to
the normal form representations. Anyway, the problem is that one of these transformations,
Ination / Deation, does not preserve the perfect recall property,
4
as it is shown in the
Figure below.
5
A
B
A A A
z
1
z
2
z
3
z
4
z
5
z
6

A
B
A A A
z
1
z
2
z
3
z
4
z
5
z
6
Figure 1.2: Perfect recall is not preserved through Ination / Deation.
3
Thompsons work deals with games dened on a nite number of nodes, where each active player has at
least two available actions. In this thesis, both restrictions are removed: it can be the case that there exist
active players with forced moves, and terminal paths can be made by some countably innite sequence of
nodes, assumed that they can be completely ordered by the immediate predecessor relation.
4
The denition of perfect recall will be given in (2.6). Informally, there is perfect recall if every active
player remembers everything he did in prior moves, and everything he knew before, whenever he has the
opportunity to choose.
5
As it is common in literature, a dashed line between two non-terminal nodes where only one player is
active means that he is not able to realize in which node of the tree he is actually playing. To be clear, in the
game the player A knows exactly the structure of the extensive form representation; nevertheless it can
be the case that he cannot observe the action chosen by the opponent, according to the rules of the game,
and hence he is not able to infer at which node he is playing.
1.2. Literature review 5
Proposing a modied version of the Addition of a Superuous Move transformation, they
show that two extensive form games with the same reduced normal forms can be transformed
into each other without appealing to the unwanted transformation of Figure 1.2, hence
preserving the perfect recall property at each transformation.
Other types of game equivalence have been analyzed in literature: for example, Hoshi and
Isaac (2010) characterize the quotient space where two extensive form games are considered
equivalent if they share the same reduced normal forms and there are no redundant players,
in the sense that players are strategically equivalent whenever they share the same payos.
Clearly, the Thompsons transformations, or the modied versions of Elmes and Reny (1994),
are still necessary to characterize this notion of equivalence. Then, they prove it is sucient
to add one more transformation, which is called Coalescing of Players.
6
Similar types
of equivalence relations between extensive form games can be found in (Dalkey, 1953) and
(Bonanno, 1992b).
Actually, the normal form representations were dened with respect to the consequences
associated with terminal nodes. Although the focus is still related to the rules of the
game, the consequence function will be not specied in the game structure, and the normal
form representation will be dened with respect to terminal paths. Hence, this theoretical
framework is neither more general, nor a special case of the previous one. It is just dierent,
and it provides another notion of game equivalence.
6
Notice that it is not an extension of Thompsons result, but a characterization of a dierent notion of
game equivalence.
CHAPTER 2
Extensive Form Games
2.1 Possibly innite trees
As recently observed by Stanley (2011, p.571), the number of systems of terminology
presently used in graph theory is equal, to a close approximation, to the number of graph
theorists. Hence, the set of notations that is going to be used throughout this thesis do not
pretend to be better than any alternative choice of terminology, as far as it is only a matter
of conventions. To start with, the blackboard letters R, Q, Z, and N stand for
R Ordered eld of real numbers,
Q Field of rational numbers,
Z Subring of integers,
N Monoid of non-negative integers.
For any collection C of sets, dene the subcollections C

and C

by
C

= C C : [C[ 1 and C

= C C : [C[ 2.
Given two non-empty sets A, B,dene AB as x A: x / B and their symmetric dierence
2.1. Possibly innite trees 7
by A B = x A B: x / A B; moreover
1
2
A
Power set of A,
(A) Set of probability measures on the measurable space (A, B),
B
A
Set of functions f : A B,
Part(A) Set of partitions of A.
For any pair of partitions P
1
, P
2
Part(A), the expressions
P
1
is ner than P
2
or P
2
is coarser than P
1

mean that every member of the partition P


1
is a subset of some member of P
2
.
Given (possibly empty) sets A, B R, we will shorten A B with B
A
: for example
Q
(a,b]
= (a, b]
Q
= Q (a, b]
for all reals a, b such that a < b. Whenever the set A = (a, ) or [a, ) for some a R the
set B
A
will be written equivalently as B
>a
or B
a
respectively: that is why, for example, the
following representations are equivalent for the set of non-negative integers:
a R
[1,0)
, b R
(1,0]
, N = Z
>a
= Z
b
.
A relation r: A B is a map from each element a A to some (possibly empty) subset
of B, i.e. r(a) B; for all (possibly empty) subsets X A dene:
r(X) = b B: x X, b r(x),
I
r
(X) = Y 2
B
: x X, Y = r(x),
D
r
(X) = x X: b B, b r(x).
If X = A then r(X), I
r
(X) and D
r
(X) represent the range, image and domain of such relation,
1
A measurable space is a pair (A, B) where B is a -algebra dened on A; in the case A is a nite set in
this thesis it is assumed B = 2
A
; in the case A is a topological space, B is assumed to be the Borel--algebra
of A.
8 Chapter 2. Extensive Form Games
respectively. In case we would not allow r(a) to be empty for some a A, i.e. r(a)
_
2
B
_

for all a A, then D


r
(A) = A, and the relation r will be termed correspondence.
The correspondence map will be replaced with

to mean strong injectivity


2
and

to
mean weak surjectivity,
3
which in turn are simplied to and for the case of functions.
4
To be coherent through notations, capital letters A, B, . . . will be reserved for sets, ghotic
letters a, b, . . . for correspondence maps and A, B, . . . for collections of sets. Three important
exceptions will be made: G, T and V will be used for the class of all extensive games (possibly
with imperfect information), the set of all invariant transformations and the set of rooted
trees, respectively. Calligraphic letters /, B, . . . will be used only to represents objects with
particular characteristics, e.g. a subcollections of extensive games.
Denition 1. A poset (partially ordered set) is an ordered pair (V, _) of a (possibly innite)
non-empty set V of vertices endowed with a binary relation _ contained in V V such that
the relation _ is:
1. reexive, i.e. V, _ ;
2. transitive, i.e. ,
t
,
tt
V, ( _
t

t
_
tt
) = _
tt
;
3. antisymmetric, i.e. ,
t
V, ( _
t

t
_ ) = =
t
.
Notice that, according to (Diestel, 2000), a binary relation _ which satises only 1 and 2
will be called (partial) pre-order, while if it saties 1, 2 and 3 it will be called equivalence,
where
3. symmetric, i.e. ,
t
V, _
t
=
t
_ .
2
Recall that a correspondence r: A B has the property of strong injectivity whenever r(a) r(a

) ,=
if and only if a = a

, meanwhile it has the property of weak injectivity whenever r(a) = r(a

) if and only if
a = a

, for all choices of a, a

A. Clearly, if r(a) is a singleton for all a A (i.e. r can be seen as a function)


then it has the strong injectivity property if and only if it has the weak injectivity property.
3
Recall that a correspondence r: A B has the property of strong surjectivity whenever I
r
(A) = (2
B
)

,
and it has the property of weak surjectivity whenever r(A) = B. Again, if r(a) is a singleton for all a A
then it has the strong surjectivity property if and only if it has the weak surjectivity property.
4
Notice that, formally, a function is not a correspondence r: A B such that [r(a)[ = 1 for all a A.
Indeed r(a) is a singleton in the collection of non-empty subsets
_
2
B
_

, that is a set which contains a unique


element. If f : A B is a function then f(a) B, hence it is not a set. Obviously, there exists a isomorphism
between the class of correspondences r: A B such that r(a) is a singleton for all a A and the class of
functions f B
A
.
2.1. Possibly innite trees 9
Since it will be convenient in the description of the model, also the following notation is going
to be used: the rst one represents the strict predecessor relation, while the second one
stands for the immediate predecessor.

t
( _
t
) ( ,=
t
),

t
((
t
) (
tt
V, _
tt
_
t
)) =
tt
,
t
.
Notice that the a poset is only a particular instance of the notion of graph, intended
as a triple (V, E, ) where V and E are (possibly innite) sets of vertices and edges, and
the function : E
__
V
2
__
maps each edge to an unordered set of vertices ,
t
, where
and
t
are not necessarily distinct.
5
The most important dierence arises not on the fact
that the image (e) is unordered (indeed a triple (V, E,
t
) with the ordering requirement

t
: E V V is just called directed graph), but on the fact that the map is not necessarily
injective, i.e. we can have (e) = (e
t
) for some distinct e, e
t
E.
Denition 2. A tree is poset (V, _) which veries the following conditions:
4. If
t
and
tt
for some ,
t
,
tt
V then
t
=
tt
.
5. There exists a root
r
such that
r
_ for all V .
To be precise, if V is a nite set then the Denition 2 is equivalent to the usual meaning of
tree.Otherwise it represents a larger class of posets (in particular, it is common to restrict
condition 4 to postulate always the existence of the immediate predecessor, except for the
root
r
). According to these notation, a tree (V, _) can be equivalently seen as a directed
graph (V, E,
t
) such that the map
t
is injective, (E) = V , there do not exist cycles,
6
and
there do not exist proper subsets V
t
V and E
t
E such that (V
t
, E
t
,
t
[
E
) with the same
properties. To make things clear, Figure 2.1 shows four examples of (nite) graphs: bullets
stand for vertices and lines stand for edges; they can be modied (each one in exactly 2
[E[
ways) to be directed graphs, as shown for example in Figure 2.2.
5
Recall that if A is a set such that [A[ 2 and b a positive integer such that b [A[ then the multibinomial
__
A
b
__
represents the collection of sets of the forma
1
, . . . , a
k
for some a
1
, . . . , a
b
A not necessarily distinct.
In particular if A is nite then

__
A
b
__

= [A[
b
.
6
Given a directed graph (V, E,

), a cycle is a sequence (
1
, e
1
,
2
, e
2
, . . . ,
k
, e
k
) such that

(e
i
) =
(
i
,
i+1
) for all i [1, k 1]
Z
and

(e
k
) = (
k
,
1
), for some edges e
1
, . . . , e
k
E and some vertices

1
, . . . ,
k
V .
10 Chapter 2. Extensive Form Games

Figure 2.1: Examples of graphs

Figure 2.2: Examples of directed graphs


All directed graphs in Figure 2.2 cannot be seen as trees, each one for a dierent reason.
The rst three ones cannot be even considered partially ordered sets: in the rst one the map

t
is not injective, i.e.
t
: E , V ; in the second one there exists a cycle, and in particular it
violates the antysimmetric property of the binary relation _; in the third one the transitive
property is not satised; the last one is a poset, but there exists non-empty proper subset
V
t
V such that (V
t
, _ [
V
) is still a poset (and moreover there does not exist a root
r
).
An example of tree can be seen in Figure 2.3.
2.1. Possibly innite trees 11

Figure 2.3: An example of tree.


Such a tree can be drawn equivalent as in Figure 2.4: the vertex
r
on the top precedes all
other ones, i.e.
r
_ for all V . Let us dene V the set of rooted trees.
Lemma 1. The root
r
of (V, _) V is unique.
Proof. On the one hand, the existence of such a vertex is guaranteed by the condition 5
of Denition 2. On the other hand, the root has to be unique: suppose for the sake of
contradiction that there exists another
t
r
such that
t
r
_ for all V . Then
r
_
t
r
and
t
r
_
r
. By the antisymmetric property of the relation _ given in the condition 3 of
Denition 1 we must have
r
=
t
r
.

r
Figure 2.4: The same tree of Figure 2.3.
12 Chapter 2. Extensive Form Games
Lemma 2. Given (V, _) V with root
r
such that the set V :
r
is well-dened,
there exists a unique P Part (V
r
) such that if P P then (P, _ [
P
) V.
Proof. First, let us prove the existence of at least one such partition P of the set V
r
:
dene the set of vertices V
t
= V :
r
, and also V

= V :
t
_ for each

t
V
t
. Clearly P = V

V
Part (V
r
) and (V

, _ [
V

) V for all
t
V
t
.
Suppose that there exists another partition P
t
dierent from the previous one P, which
satises the assumption as well. Then there exist P P
t
and distinct
t
,
tt
V
t
such that
(P V

,= ) (P V

,= ) .
Hence some distinct vertices
1
,
2
P such that
1
P V

and
2
P V

are well-
dened. Since (P, _ [
P
) belongs to V by assumption, there exists a root
p
P such that

p
_ for all P, which is unique according to Lemma 1. In particular
p
_
1
and

p
_
2
, and at the same time
(
r

t
_
1
) (
r

tt
_
2
) .
As far as
t
,=
tt
, by construction every pair of trees with roots
t
and
tt
have no elements
in common, that is V

= . Hence it must hold also that


p

t
and
p

tt
. The
unique possible case is
p
=
r
, which is a contradiction since it was assumed that

p
P P
t
Part (V
r
) .
Let s be the correspondence such that s() is the (non-empty) subset of vertices which
weakly precedes ,
7
that is
s: V V

t
V :
t
_ .
Morever, let s be the function such that s() is the vertex such that s() , whenever it
7
Indeed
r
s() for all V , hence s is a correspondence.
2.1. Possibly innite trees 13
can be dened. Call D
s
(V ) V the domain of such function,
8
then
s: D
s
(V ) V
s() such that s() .
Denition 3. Given a tree (V, _), dene V the collection of all sets V
t
(2
V
)

which can
be completely ordered by the immediate relation , i.e. such that there exists a path
9

t
. . . . . .
tt
with
t
, . . . , . . . ,
tt
= V
t
.
In particular it implies that all vertices dierent from the root
r
which belong to some
V
t
V have to have a well-dened predecessor, so that the following chain of inclusions
holds:

V

V
V
t
D
s
(V )
r
V.
Lemma 3. If (V, _) V and V
t
V then V
t
is nite or at most countable.
Proof. If V
t
is a nite set then the claim is trivial. Otherwise [V
t
[ = , and according to
Denition 3 the condition V
t
V implies that there exists a path
t
. . . . . .
tt
such that
t
, . . . , . . . ,
tt
= V
t
. Hence
10
[N[ [V
t
[ 2[N[ = [N[ = [V
t
[ = [N[.
Lemma 4. Fix a tree (V, _) V and a vertex V
r
. Then
s() V s() (D
s
(V )
r
) (D
s
1(V ) ) .
Proof. The if part trivially follows by denitions. For the only if part, suppose that s()
belongs to V , i.e. it can be completely ordered by the immediate relation , in a path of
8
In particular the domain of such function veries D
s
(V ) V
r
. It is possible also that D
s
(V ) is a
proper subset (possibly the empty-set) of V
r
, as it is going to be shown in Remark 2, or simply choosing
(V, _) = ([0, 1]
R
, ).
9
Notice that the lenght of a path, that is [V

[, is allowed to be also (possibly uncountable) innite.
10
Recall the smallest order of innity is the one of the set of (positive) integers, so that [X[ [N[ for all
sets X such that [X[ = .
14 Chapter 2. Extensive Form Games
the form
11

r
. . . . . . . (2.1)
Then s(
t
) is well-dened for all
t
D
s
(V )
r
, so that (s
n
())
nN
represents the
(countable) sequence of vertices in such path starting from the right. Also s
1
(
t
) s()
is non-empty
12
(or better, it is a singleton) for all
t
D
s
1(V ) . It means that iterating
such function we can construct the countable sequence starting from the left at the root

r
. It implies that we can order with countably many points of s() in the path (2.1) at
the left and at the right. Adding the fact that s() can be only nite or at most countable
by Lemma 3, the proof is complete.
Moreover, such path (2.1) has to be unique. Suppose for the sake of contradiction that
there exists a vertex V
r
with (at least) two distinct paths from
r
to itself, i.e.
there exist ,
t
,
tt
V such that
t
,=
tt
,

r
. . .
t
_ and
r
. . .
tt
_ .
In particular it implies that
t
V :
t
_
t

tt
V :
tt
_
tt
, which is impossible,
as far as at the same time by Lemma 2

t
V :
t
_
t

tt
V :
tt
_
tt
= .
As immediate corollary, the following inclusion holds:
s (D
s
(V )) (D
s
(V )
r
) (D
s
1(V ) ) .
Special labelings are going to be assigned to some subsets of vertices with useful properties,
the rst one related to the closeness to (nite) terminal nodes, the second one with respect
to the tree representation in Hasse diagram (Birkho, 1948).
11
Indeed
r
, which is unique according to Lemma 1, belongs to s().
12
Recall that if f : A B is a function then the inverse map f
1
: B A is a correspondence if and only
if f is surjective, i.e. f : A B.
2.1. Possibly innite trees 15
For all (V, _) V, dene the (possibly nite) sequence of sets
_
V
(n)
_
nN
by
V
(0)
= V,
V
(n+1)
= V
(n)
:
t
V
(n)
,
t
, for all n N
whenever possible, and in particular when [V
(n)
[ 2.
Moreover, dene the sequence of sets
_
Z
(n)
_
nN
by
Z
(0)
= V : (
t
V _
t
) = ( =
t
),
Z
(n+1)
= V :
t
Z
(n)
,
t
, for all n N
whenever possible, i.e. whenever Z
(n)
D
s
(V ). Notice that from the denition there is no
reason to state that Z
(0)
is well-dened. In rough words, the sequence
_
V
(n)
_
nN
aims to
represent the whole set of vertices V after exactly n consecutive deletion of terminal nodes
(whenever such operation is possible); for example V
(1)
stands for non-terminal nodes, which
is a well-dened sets for a tree (V, _) V if and only if Z
(0)
D
s
(V ). Meanwhile, the
sequence
_
Z
(n)
_
nN
represents the set of nodes V such that there are exactly other n
distinct vertices which follow itself.
Remark 1. The identity

nN
Z
(n)
= V is false in general, even in the case that the whole
sequence (Z
(n)
)
nN
is well-dened. As example, choose the tree (V, _) such that
V = [0, 1]
R

_
2 +
1
n + 1
_
nN
,
where _
t
for some ,
t
V if and only if
t
. On the one hand, the set Z
(n)
is
well-dened for all n N, indeed Z
(n)
= 2 +
1
n+1
; on the other hand

nN
Z
(n)
[2, 3]
Q
,
which has to be clearly dierent from V itself.
Looking (V, _) V such that Z
(0)
is well-dened as an Hasse diagram, call V
Z-n
the greatest
subset of V made by all vertices in some nite terminal paths, i.e.

Z
(0)
: [s()[N
s(),
16 Chapter 2. Extensive Form Games
and V
Z-inf
the greatest subset of V made by innite terminal paths such that the set of
weakly predecessors s() can be ordered by the immediate relation . Hence V
Z-n
, V
Z-inf

represents a partition of the vertices which belong to paths of terminal nodes which can be
completely ordered by . Formally
V
Z-n
= V :
t
Z
(0)
, s(
t
), [s(
t
)[ N,
V
Z-inf
= V V
Z-n
:
t
Z
(0)
, s(
t
) V .
Then, let us partition V (V
Z-n
V
Z-inf
) in V
Ninf
and V
Rinf
such that the former represents
the set of vertices V belonging to some non-terminal path which can be completely
ordered by the immediate relation . More precisely
V
Ninf
= V (V
Z-n
V
Z-inf
):
(
n
)
nN
V
N
,
n

nN
, s() V ,
n

nN
Z
(0)
= ,
and
V
Rinf
= V (V
Z-n
V
Z-inf
V
Ninf
).
Notice that these sets V
Z-n
, V
Z-inf
, V
Ninf
and V
Rinf
are well-dened if and only if the
set of terminal nodes Z
(0)
is well-dened as well. Intuitively, the set V
Z-n
represents the
set of all vertices which belongs to nite path of terminal nodes Z
(0)
, i.e. s() =
, s(), s
2
(), . . . , s
n
() for some non-negative integer n, where as usual s
n
= s . . . s
. .
n times
represents the n-th iterate of the function s. The reason underlying the denition of these
sets is to classify the vertices V primarly to the existence of paths which can be ordered by
(i.e. sets V
t
V ), then to the existence of a terminal node in the path and nally to the
lenght of the path itself.
Lemma 5. Given (V, _) V such that Z
(0)
is well-dened, then:
V
Z-n
= s() V .
Proof. By assumption there exists an non-negative integer n such that s() =
2.1. Possibly innite trees 17
, s(), s
2
(), . . . , s
n
(). Recalling that
r
s(), the nite path is of the form

r
= s
n
() s
n1
() . . . s() .
In particular it means that s()
r
= s
n
()
[0,n1]
Z
D
s
(V ). Since the set s() has to
be nite, then also the following inclusion holds
s() (D
s
(V )
r
) (D
s
1(V ) ) .
The claim follows by the equivalence representation given in Lemma 4.
This Lemma allows us to describe this set equivalently as
V
Z-n
= V :
t
Z
(0)
, s(
t
) V , [s(
t
)[ N,
claring the dierence with V
Z-inf
: assumed that the set Z
(0)
can be identied, the latter
allows the set s() to be not nite, for some vertex Z
(0)
V D
s
1(V ).
Remark 2. If (V, _) V is tree such that Z
(0)
is dened, then the costructed sets are
pairwise disjoint and
V
Z-n
, V
Z-inf
, V
Ninf
, V
Rinf
Part(V )
Moreover, if V
Rinf
,= then it cannot be a nite set. Nevertheless, there is no reason to
state that V
n
is a nite set. A simple counterexample is the rooted tree (V, _) such that V
is a (possibly uncountable) innite set and the _ relation is dened only by
r
_ for all
V .
Remark 3. Although Lemma 3 proves that s() is an innite countable set for all
V
Z-inf
Z
(0)
, the same does not hold for the whole set V
Z-n
. Let us make an example: dene
the tree (V, _) with (unique) root
r
, and call T
t

tR
0
Part(V ) such that T
0
=
r
and
T
t
D
s
(V ) a countable innite set for all positive reals t. The relation _, except for the
root
r
which preceeds every V , will be choosen such that _
t
only if there exists a
t R
>0
such that ,
t
T
t
. According to this construction, V
Z-n
= V
Ninf
= V
Rinf
=
and V
Z-inf
= V . Moreover
[V
Z-n
[ [N R[ [R[,
18 Chapter 2. Extensive Form Games
implying that V
Z-n
can be also an uncountable set. Such costruction is really possibile, e.g.
choosing
t (0, 1)
R
, T
t
= t + z
zZ
and _ coincides with on each set T
t
.
Also, for all trees (V, _) V dene (whenever possible) the following sequence of sets (V
n
)
nN
by
V

0
=
r
,
V

n+1
= V :
t
V
n
,
t
, for all n N.
Again, from the denition of tree (V, _), it can be the case that V

1
is not well-dened.
Remark 4. There is no reason to state that

zZ
V
z
= V : a simple counterexample is the
rooted tree (V, _) such that V = [0, 1]
R
and _
t
if and only if
t
. Notice that in this
example V
n
is well-dened only if n = 0. Even if it was possible to well-dene such subsets,
they would be singletons for all n N, implying that V would be made by at most countably
many vertices, which is not the case: a explicit example of this type can be made on the the
same line of Remark 1.
The main results of this thesis will be shown to hold conditioning on the fact that (V, _) V
belongs to a particular subcollection of trees, which is going to be called V
std
.
Denition 4. The set V
std
is composed by all trees (V, _) V such that
1. Z
(0)
is well-dened;
2. V
Rinf
= ;
3. V Z
(0)
is at most countable.
In other words, a standard tree (V, _) is tree such that the terminal nodes are well-
dened (such set is allowed to be also uncountable), and such that the subset of non-terminal
nodes V Z
(0)
is nite or at most countable (hence, the same holds for V
(1)
, as far as
V
(1)
V Z
(0)
); in particular for all vertices V the path from the root
r
to itself can
2.1. Possibly innite trees 19
be explicitely written only with the immediate predecessor relation . Hence, the domain
of the predecessor function s veries
(V, _) V
std
= D
s
(V ) = V
r
.
Observe that if (V, _) is a tree and V = V
Z-n
then each set above is easily well-dened. Let
us see what happen in other cases.
Lemma 6. If (V, _) V
std
and V ,= V
Z-n
then V
n
is well-dened and non-empty for all
n N and
V
n

nN
Part(V ).
Proof. As far as (V, _) V
std
, the set V
Rinf
has to be empty, so that
V = V
Z-n
V
Z-inf
V
Ninf
.
Then, according to Lemma 5, if V is a vertex then s() V , i.e. the sets of (weakly)
predecessors of can be ordered by the immediate predecessor relation . If s() is nite
then there exists n N such that
s() = , s(), . . . , s
n
().
Otherwise s() is countable innite set, according to Lemma 3, and there exists a (unique)
ordering by in the form

r
. . . s
n
() s
n1
() . . . s() .
It means that it is uniquely dened a vertex
1
s() such that
r
= s(
1
). Suppose that

n
is uniquely identied for some positive integer n; then
n+1
s() is the unique vertex
such that
n
= s(
n+1
). By the principle of mathematical induction (which can be shown to
be exactly equivalent to the axiom of well-ordering) the vertex
n
is uniquely dened for all
positive integers n. It is clear now how to construct the sets V
n
for all n N.
In particular it implies that the collection of sets V
n

nN
has to be nite
13
or at most
13
Clearly, the collection V
n

nN
is nite if and only if V = V
Z-n
.
20 Chapter 2. Extensive Form Games
countable innite. Moreover, it is going to use explicitly the following well-known assumption:
AC (Axiom of Choice). For each family of non-empty sets (X
i
)
iI
, there exists (x
i
)
iI
such that x
i
X
i
for all i I.
Such axiom was formulated rst in 1904 by Ernst Zermelo in order to formalize his proof
of the well-ordering theorem: see for example (Royden, 2010). The following Lemma will be
very useful for the proof of the main result:
Lemma 7. Let X be a non-empty set and (P
i
)
iI
a family of partitions, i.e. P
i
Part(X)
for all i I. Under AC then
14

iI
P
i
Part(X).
Proof. For each x X dene the family of sets (P
i
(x))
iI
such that x P
i
(x) P
i
for all
i I. And dene P(x) =

iI
P
i
(x), for each x X. Consider the collection P(x)
xX
and suppose that P(x) P(x
t
) ,= for some x, x
t
X, i.e. there exists x
tt
X such that
x
tt
P(x) P(x
t
). If there exists j I such that P
j
(x) ,= P
j
(x
t
) then
x
tt
P(x) P(x
t
) =

iI
(P
i
(x) P
i
(x
t
)) P
j
(x) P
j
(x
t
) = ,
which is impossible. It implies that P
i
(x) = P
i
(x
t
) for all i I, i.e.
P(x) P(x
t
) ,= P(x) = P(x
t
).
Hence, it is well-dened a equivalence relation on the collection P(x)
xX
such that
P(x) P(x
t
) if and only if P(x) = P(x
t
). By AC it is possible to choose a representative
element of each equivalence class, let us say P(x)
xX
for some non-empty X
t
X.
By construction the collection P(x)
xX
is made by pairwise disjoint sets such that

xX

P(x) = X, hence

iI
P
i
= P(x)
xX
Part(X).
14
For all P
1
, P
2
Part(X), the intersection P
1
P
2
is dened as the coarsest partition P Part(X)
such that P is ner than P
1
and P
2
. Explicitely, it represents the inferior limit with respect to the partial
order of the collection of partitions, i.e. P = P
1
P
2
: P
1
P
1
, P
2
P
2
.
2.1. Possibly innite trees 21
Since it will be used often later, it is convenient also to dene the following sets, whenever
(V, _) V
std
and n N:
1
(n+1)
= V Z
(n)
.
Remark 5. According to the previous denitions, the inclusion V
(n)
1
(n)
holds for all
positive integers n. Indeed:
V
(n)
= s (V
r
) = (V
Z-n
V
Z-inf
) Z
(n1)
(V
Z-n
V
Z-inf
V
Ninf
) Z
(n1)
= V Z
(n1)
= 1
(n)
.
Finally, the set of sequences of (possible innite) terminal paths : is partitioned in :
n
and :
inf
, where
:
n
=
_
(
n
)
n[0,m]
Z

nN
V
n
:
t
Z
(0)
V
Z-n
, s(
t
) =
n

n[0,m]
Z
_
and
:
inf
=
_
(
n
)
nN
V
N
:
t
Z
(0)
V
Z-inf
, s(
t
) =
n

nN
_

_
(
n
)
nN
V
N
: m N, s(
n

n[0,m]
Z
) =
n

n[0,m]
Z

n

nN
Z
(0)
=
_
.
According to these denitions, :
n
represents the set of terminal and nite paths with can
be completely ordered by . Meanwhile, :
inf
stands for the set of innite (countable) paths
which can be also ordered by (such that they can end in some terminal Z
(0)
or
not). Clearly, if V = V
Z-n
then : = :
n
and it can be isomorphically represented by Z
(0)
.
Remark 6. Apart from the denition of the set V
Z-n
, which is mathematically clear, it
should be not obvious to state that such set can actually exist in some tree (V, ) V
std
.
According to Lemma 3, if Z
(0)
V
Z-n
then s() has to be an innite countable set, i.e.
[s()[ = [N[. On the one hand, the rst example that one can think is ([0, 1]
Q
, ), but the
problem is that it does not belong to V
std
, as far as s(1) / V .
15
On the other hand, such
example really exists: it is enough to choose (V, _), where
V =
_
1
2

1
n + 2
_
nN
and _
t

t
.
15
The reason underlying this fact is that [0, 1]
Q
is dense in [0, 1]
R
.
22 Chapter 2. Extensive Form Games
It is straightforward to check that (V, _) V
std
and V = V
Z-inf
.
For convenience, it will be useful to dene the function which associate to each tree
(V, _) V
std
the maximal lenght of paths which belong to :
n
, which has to be a nite
non-negative integer, that is
v : V
std
N,
(V, _) 1 + max
(n)
n[0,m]
Z
:
n

n[0,m]
Z

.
Hence it represents the longest nite lenght between all terminal paths, as it is going to be
seen in Section 2.3.
Remark 7. The reason underlying the denition of the collection of trees V
std
is that a
construction level-by-level is needed, in the sense that (a possibly innite sequence of) games
with simultaneous moves will be played, one for each level V

0
, V

1
, . . .. This sequence of
games stops if a terminal node is reached, i.e. such that if a game is played at some vertex
V
(1)
. It would be rather reasonable to assume that if the sequence of games is not nite
and the game with simultaneous moves at level V
n
is going to be played at time t
n
, for some
(strictly increasing) sequence of reals (t
n
)
nN
, then
liminf
nN
t
n+1
t
n
> 0.
In the real world, indeed, a minimum amount of time is always available between two
consecutive games. That is why the addition assumption on the description of the set V
std
could be given in Denition 4:
V
Z-inf
= .
As far as it does not allow to improve the results of the following sections, and neither to
obtain any technical simplication in their proofs, it is chosen to keep the more general
theoretical framework which is already dened.
2.2. Active players and available actions 23
2.2 Active players and available actions
Given a tree (V, _) V
std
, a game with simultaneous moves
16
is going to be played at each
non-terminal vertex 1
(1)
.
17
Let I be the non-empty greatest set of players who are
potentially active at least once in the tree (V, _). On the one hand, it means that it is
well-dened a weakly surjective correspondence
p: 1
(1)

I
such that p() represents the set of players who are active at the node 1
(1)
. On the other
hand, also its inverse correspondence is weakly surjective,
18
let us say
v: I

1
(1)
,
i 1
(1)
: i p().
Clearly, for each player i I the set v(i) stands for the (non-empty) greatest subset of
vertices 1
(1)
such that i is potentially active at the game with simultaneous moves which
is played at vertex .
Lemma 8. If (V, _) V
std
and sup
1
(1) [p()[ is nite then I is nite or at most countable.
Proof. Since the correspondence p is weakly surjective by construction then
I = p
_
1
(1)
_
=

1
(1)
p().
Also by assumption there exists a positive integer n such that [p()[ n for all 1
(1)
. It
follows that
[I[ =

1
(1)
p()

1
(1)
p() n[1
(1)
[.
As far as (V, _) V
std
then 1
(1)
is nite or at most countable, according to Denition 4.
The claim follows.
16
According to literature, sometimes games with simultaneous moves are called with the misleading term
strategic games.
17
Notice that if (V, _) belongs to V
std
, then 1
(1)
= V
(1)
if and only if V
Ninf
= , according to Remark 5.
18
Recall that if r: A B is a correspondence, then its inverse r
1
: B A is not in general a relation.
Moreover, r
1
is a correspondence if and only if r is weakly surjective, that is r(A) = B; in such case, r
1
is
weakly surjective too.
24 Chapter 2. Extensive Form Games
Dene / the subset of I 1
(1)
such that (i, ) / if and only if i p(), or equivalently
/ = (i, ) I 1
(1)
: v(i).
In other words, / represents the collection of all pairs (i, ) such that the player i I is
active
19
in the game with simultaneous moves played at node 1
(1)
. In particular the set
/ has to be non-empty, as it is shown in the following Lemma.
Lemma 9. If (V, _) V
std
then [/[ max[I[, [1
(1)
[.
Proof. By construction the relation p: 1
(1)

I is a correspondence, implying that [/[


[1
(1)
[. Adding the fact that it is also weakly surjective (or equivalently that also its inverse
v is a correspondence), then also [/[ [I[.
For all pairs (i, ) /, dene A
i,
a non-empty set of actions: it represents the set of
available actions at player i I when the game with simultaneous moves is played at the
non-terminal node 1
(1)
. For all non-empty subsets B / dene the set
A
B
=

(i,)B
A
i,
. (2.2)
Notice that A
B
is well-dened even if B is not a cartesian product. To ease the notation, the
sections-type sets are
i I, A
i
= A
iv(i)
=

(i,),(i1
(1)
)
A
i,
,
and
1
(1)
, A

= A
p()
=

(i,),(I)
A
i,
.
In few words, the denition of the sets A
i,
is the natural way to assign labellings to edges
going from 1
(1)
to
t
V such that
t
. It follows that
1
(1)
, A


= s
1
().
19
Formally, a player i I is said to be active at node 1
(1)
if and only if (i, ) /.
2.2. Active players and available actions 25
In particular, the game with simultaneous moves at vertex 1
(1)
, which is going to
be termed

from here later, allows each player i p() to choose in the set of available
actions A
i,
. Hence, a sequence
(a
i,
)
ip()
A

(2.3)
uniquely identies a vertex
t
V such that
t
. From here later such vertex will be
called q
_
(a
i,
)
ip()
_
. Moreover, for all (i, ) / dene the correspondence
20
q: A
i,

s
1
(),
a
i,

_
_
_
q
_
_
a
i,

jp()\i
A
j,
_
_
_
_
_
.
In few words, the function q maps a prole of actions (a
i,
)
ip()
into the corresponding
immediate successor vertex, while the correspondence q represents all the vertices which can
be assigned only an action a
i,
has been xed.
Remark 8. It can be assumed without loss of generality that
i I, ,
t
v(i), A
i,
A
i,
,= A
i,
= A
i,
. (2.4)
Indeed, in the case that A
i,
A
i,
is non-empty, but the two sets are dierent, the player
i can realize that the set of actions available at node is dierent than the set of actions
available at
t
. Hence, he can assign new labels to one of these sets so that condition (2.4)
holds.
2.2.1 Truncated trees
Denition 5. Let (V, _) V
std
be a tree and x
t
1
(1)
and non-empty set V
t
s
1
(
t
).
21
Then
(V [

,V
, _ [

,V
) V
std
20
To be precise, the function q and the correspondence q should be indexed by and (i, ) respectively.
Nevertheless, the subscript has been hidden to ease the notation. Hence, the meaning will be clear from the
context.
21
Recall that if f : A B is a function then its inverse f
1
: B A: b a A: f(a) = b is in general
a relation; moreover, it is a correspondence if and only if the function f : A B is surjective, i.e. f(A) = B.
26 Chapter 2. Extensive Form Games
is the truncated tree such that
V [

,V
=
t

tt
V : _
tt

and

tt
_ [

,V

ttt

tt
_
ttt
.
Remark 9. Notice that if (V, _) V
std
then the identity
(V, _) = (V [

,V
, _ [

,V
)
holds if and only if

t
=
r
V
t
= V

1
.
According to Denition 5, this statement holds because V

1
= s
1
(
r
).
Denitions for sets given in Section 1.1 for the whole tree (V, _) are extended for the
truncated trees (V [

,V
, _ [

,V
): if n is a non-negative integer then
V
(n)
[

,V
= V
(n)
V [

,V
,
Z
(n)
[

,V
= Z
(n)
V [

,V
,
1
(n)
[

,V
= 1
(n)
V [

,V
.
The classication of truncated trees is in this Section because the denition of the set of
players I can be extended in a similar way. For all
t
1
(1)
and non-empty V
t
s
1
(), let
us write
I[

,V
=

V [

,V

p(),
and
I|

,V
=

V [

,V
\

p()
Clearly, I[

,V
represents the set of players who are active at least once in the truncated tree
(V [

,V
, _ [

,V
), while I|

,V
does not require that such players are active in the root
t
of
the truncated tree.
Remark 10. For all trees (V, _) V
std
and
t
, V
t
such that
t
1
(1)
and 1
(1)
s
1
(
t
),
2.2. Active players and available actions 27
the set of players I[

,V
has to be non-empty. Indeed

t
V [

,V
= p(
t
) I[

,V
.
Conversely, there is no reason to state that I|

,V
,= , and it should be clear that
I|

,V
=
t
V
(1)
.
Moreover, the trivial inclusion I|

,V
I[

,V
does not have to be necessarily strict, indeed,
the equality can be reached if and only if p(
t
) I|

,V
, that is, if each player active in the
root
t
is active at least another time in the truncated tree (V [

,V
, _ [

,V
).
Lemma 10. Given a tree (V, _) V
std
such that 1
(1)
is nite, then
V
z

z[0,v(V,)]
Z
Part(V )
Proof. If V
Z-inf
V
Ninf
,= then there exists at least a innite countable path (which can
be terminal in some Z
(0)
or not), i.e. :
inf
,= , implying that
(V
Z-inf
Z
(0)
) V
Ninf
V Z
(0)
= 1
(1)
,
which is impossible. Hence
[1
(1)
[ < V = V
Z-n
[V
(1)
[ < ,
and in such case 1
(1)
= V
(1)
. In particular the collection of set of vertices V
z

z[0,v(V,)]
Z
is
a partition of V .
Lemma 11. Given a tree (V, _) V
std
such that V is nite, then
[V [ = 1 +

z[1,v(V,)]
Z

Z
(z)

(i,),(I)
[A
i,
[.
Proof. Since 1
(1)
V then 1
(1)
has to be nite as well, and Lemma 10 applies. Hence
V

0
, . . . , V

v(V,)
Part(V ). Observe now that
z [0, v(V, _)]
Z
, Z
(z)
= V

v(V,)z
.
28 Chapter 2. Extensive Form Games
In particular
V =
_
z[0,v(V,)]
Z
V
z
=
_
z[0,v(V,)]
Z
Z
(z)
=
r

_
z[0,v(V,)1]
Z
Z
(z)
.
Counting the number of elements on each member of this identity and considering that
1
(1)
, [A

[ = [s
1
()[,
we can conclude
[V [ = 1 +

z[0,v(V,))
Z
[Z
(z)
[ = 1 +

z[1,v(V,)]
Z

Z
(z)
[A

[.
The claim follows from the Equation (2.2).
Lemma 12. Given a tree (V, _) V
std
and two partitions P, P
t
Part(/), then
22

1P
A
1

=

A
1
.
Proof. Such isomorphism, formally between sequences of cartesian sets, easily holds as far as
P Part(/), A
,

=

1P
A
1
.
As immediate corollary, if (V, _) V is a tree such that V is nite, then

iI
[A
i
[ =

V
(1)
[A

[.
2.2.2 Best-control sets
For each player i I, a (pre-non-terminal) vertex
t
1
(2)
and a non-empty set V
t
s
1
(
t
)
(that is, a set of vertices such that each one of them immediately follows
t
), a set of
22
Informally, an isomorphism

= is a map that preserves sets and relations among elements.
2.2. Active players and available actions 29
non-terminal vertices
C v(i) (V [

,V

t
)
is said to be a control-set if every terminal path allowed by the truncated tree (V [

,V
, _
[

,V
) has at least one vertex of C along its path. Formally it means that
(
n
) : (V [

,V
, _ [

,V
) =
n
C ,= . (2.5)
Here, : (V [

,V
, _ [

,V
) stands for the set of terminal paths allowed by the truncated tree
(V [

,V
, _ [

,V
) and the sequence (
n
) is intentionally not indexed to mean that it can be
nite or countable innite.
Observe that it is not assumed that player i is necessarily active at vertex , i.e. it can be
the case i / p(). Moreover such denition is meaningful only if the set 1
(2)
is well-dened,
which happens if and only if v(V, _) 2.
Denition 6. For each tree (V, _) V
std
, player i I, vertex
t
1
(2)
and non-empty set
V
t
s
1
(
t
), let C

,V

,i
be the collection of all control-sets. If this collection is non-empty,
the best-control set c

,V

,i
is dened by
c

,V

,i
= arg min
CC

,V

,i
[C[.
Intuitively, such set, whenever it is dened, represents the group of simultaneous moves
games which are nearest to the vertex 1
(2)
and where player i I is always active such
that each terminal path allowed by the truncated tree has to pass also through one of such
vertices. The following Lemma shows that the Denition 6 is well-posed.
Lemma 13. For each tree (V, _) V
std
, the following holds
[C

,V

,i
[ 1 =

arg min
CC

,V

,i
[C[

= 1.
Proof. It is enough to construct the set c

,V

,i
in an alternative way, and check that this
construction denes this set in a unique way. According to (2.5), for each allowed terminal
path (
n
) : (V [

,V
, _ [

,V
), let ((
n
)) dened by
((
n
)) = (
n
) : (V [

,V
, _ [

,V
) :
t
i p(),
30 Chapter 2. Extensive Form Games
that is, the nearest vertex along the path (
n
) which (strictly) follows
t
and such that player
i is active. Then it is clear that
c

,V

,i
=
_
(n):(V [

,V
,[

,V
)
((
n
)).
The condition C

,V

,i
,= in Lemma 13 is clearly necessary, indeed it can be the case that
such collection of sets is empty, e.g. whenever i / I|

,V
, or equivalently
v(i) V [

,V

t
.
With the same line of reasoning of the above proof, it should be clear that if the greatest set
V
t
s
1
(
t
) such that the best-control set c

,V

,i
exists (or equivalently such that C

,V

,i
,= )
then is uniquely dened as well; moreover, it is non-empty if and only if there exists a vertex

tt
1
(1)
such that
t

tt
and the collection C

,i
is non-empty. From here later, such
greatest subset V
t
s
1
(
t
) will be called V
max

,i
,
23
that is
V
max

,i
= arg max
V

s
1
(

): C

,V

,i
,=
[V
t
[.
Hence, for all players i I and vertices
t
1
(2)
, if there exists a vertex
tt
s
1
(
t
)
such that the collection C

,i
is non-empty, then it is well-dened uniquely the greatest
V
max

,i

_
2
s
1
(

)
_

such that the best-control set c

,V
max

,i
,i
exists.
23
The notation V
max

,i
highlights the fact that this (non-empty) set is maximal and it denition depends on
the choice of the vertex

1
(2)
and player i I|

,s
1
(

)
.
2.3. Information sets partitions 31
2.3 Information sets partitions
Let us study now how to model the information structure and in particular how to formalize
the situation where at some point of the game the choices of some players cannot not be
observed by some other ones, according to the rules of the game.
24
Denition 7. Given a tree (V, _) V
std
, dene 1 the set of histories, which is partitioned
into
1
n
=
_
(
n
)
n[0,m]
Z

nN
V
n
: s
_

n[0,m]
Z
_
=
n

n[0,m]
Z
_
and
1
inf
=
_
(
n
)
nN
V
N
: m N, s(
n

n[0,m]
Z
) =
n

n[0,m]
Z
_
.
In few words, 1
n
represents the set of nite histories h

, where h

is the sequence of
vertices which goes from the root
r
to the vertex itself (indeed, such sequence is unique
according to Lemma 4); and 1
inf
stands for the set of countable innite sequences (
n
)
nN
such that
n

n+1
for all non-negative integers n and
0
=
r
. Notice that, according to
denitions of terminal paths, the inclusion :
n
1
n
holds; moreover, under the assumption
(V, _) V
std
, also 1
inf
= :
inf
. Hence it makes sense to dene the set of non-terminal histories
1 as
1 = 1 : = 1
n
:
n
.
Remark 11. If (V, _) V
std
then V coincides exactly with (2
V
)

, and in particular
[1[ [1
n
[ [1[ [V [.
Moreover, there exists a trivial isomorphism 1
n

= V such that if V there exists a unique
associated history h

1, and conversely for each h 1 there exists a unique associated


vertex
h
V . Indeed, the following characterization can be stated
h

1
h
1
(1)
.
Finally, observe that the implication
V
Z-n
V
Ninf
= h

1
fin
24
Notice that it has nothing to do with features of players, e.g. bounded rationality, forgetfulness, etc.
32 Chapter 2. Extensive Form Games
holds in general, but the same cannot be said for vertices V
Z-inf
: according to the example
shown in Remark 6, it can be the case that
h

V
Z-inf 1
n
,= h

V
Z-inf 1
inf
,= .
It should be clear now that for all trees (V, _) V the following identity holds
v(V, ) = 1 + max
V
Zn [h

[.
and it can be the case that v(V, ) ,= 1 + max
V
[h

[.
The set of non-terminal histories of each player i I can be dened at the set of non-terminal
histories where at the last node he is active, that is
i I, 1
i
= h 1: i p(
h
).
Informally, for each player i I, a subset of vertices V
t
v(i) belongs to one of his
information set if such player is not able to realize at which particular node he is playing: at
rst sight whenever

V

A
i,
,= .
According to Remark 8, this notation can be notably simplied.
Denition 8. For each player i I in a tree (V, _) V
std
let H
i
Part(1
i
) be the
collection of information sets where each H
i
H
i
represents a class of the quotient space
1
i
/ , where
h

A
i,
= A
i,
.
Since H
i
is a partition of the set of non-terminal histories 1
i
then easily
i I, [H
i
[ [1
i
[ [1[ = [1
n
:
n
[ [V Z
(0)
[.
Considering that 1
(1)
is at most countable (indeed the tree (V, _) belongs to V
std
), the
collection of information sets has to be nite or at most countable as well. In the second
2.3. Information sets partitions 33
case, it makes sense to index each H
i
H
i
with a subscript j J, that is
H
i
= H
i,j

jJ
,
where J is a non-empty set which is nite or at most countable. A straightforward assumption
about the structure of the collection H
i
is going to be made, which is common in literature:
see for example the works of Elmes and Reny (1994), Thompson (1952) or Kreps (1990).
Perfect recall. Each player knows and remembers everything he did in prior moves.
In rough words, it states that players never forget information once it is acquired.
25
Formally
a extensive game played on a tree (V, _) V
std
satises perfect recall if
i I,
t
,
tt
v(i), ((
t
_
tt
) (h

H
i,j
H
i
)) = (
t
=
tt
). (2.6)
A special class of games are the one with perfect information, i.e. games such that
i I, H
i
= h

v(i)
,
i.e. the nest partition of 1
i
(Osborne and Rubinstein, 1994). Obviously, every game with
perfect information satises also perfect recall.
According to the above construction and observations, a (possibly innite) extensive form
game with imperfect information can be represented by a tuple
V, _, I, p, (H
i
)
iI
, (

)
1
(1) , (2.7)
25
Until recently, the framework of this thesis allowed the structure of information sets H
i
to violate perfect
recall. Following a mathematical point of view, I was convinced that this additional assumption was in some
sense restrictive, as far as the main result holds only in a proper subset of possible games. As my advisor
P. Battigalli noticed, my belief was not correct: Historically, the violation of perfect recall was introduced
in the rules of the game to represent with a technical trick the popular card game of bridge between two
pairs of players as a two-players game, allowing forgetfulness (von Neumann and Morgenstern, 1953). The
fact is that, apart from the technical trick, the violation of this property has nothing to do with the rules
of the game, i.e. depending on last instance only on the intrinsic features of the players and their memory.
Nevertheless, it can be shown without much diculty that all the results which are going to be proved in the
following sections hold also for games without perfect recall, conditioning on the fact that it is assumed the
knowledge of the sequence of partitions (P
i
)
iI


iI
Part (v(i)) which represents the points where such
property does not hold, relying on the trivial isomorphism 1
i

= v(i) for all i I.
34 Chapter 2. Extensive Form Games
such that (V, _) V
std
and the property of perfect recall given in (2.6) is satised. The
collection of such extensive games will be denoted with G.
2.4 :-reduced normal forms
In game theory, the term strategy is sometimes wrongly confused with move. On the
one hand, the latter is an action taken at the some point of the game, that is a
i,
A
i,
for
some (i, ) /. On the other hand, the former is a complete algorithm which completely
denes the evolution at every possible situation where the players could be active. As far as
by construction each player i I is not able to distinguish between histories in the same
information set, i.e. histories which belong to the same element of the quotient space 1
i
/ ,
then a strategy has to be dened a ordered sequences of actions, one for each vertex associated
with a histories in each information set.
26
Denition 9. Given a game G, the set of strategies of player i I is dened as
S
i
=

(h
i,j
)
jJ

jJ
H
i,j
A
i,
h
i,j
. (2.8)
According to the construction of the information partition H
i
= H
i,j

jJ
given in Denition
8, the cartesian product S
i
is invariant to the choice of the sequence (h
i,j
)
jJ


jJ
H
i,j
:
again, such choice is possible thanks to the AC. Denote also with S the set of sequences of
strategies of each player, that is

iI
S
i
.
27
Lemma 14. Given a game G and a prole of strategies s S, the terminal path z :
is uniquely dened.
Proof. Suppose for the sake of contradiction that there exists a strategy s = (s
i
)
iI

iI
S
i
such that it allows (at least) two distinct terminal paths z, z
t
:, let us say z = (
n
) and
26
That is the reason why in literature games with simultaneous are (wrongly, again) dened strategic
games.
27
Notice that the isomorphism between cartesian products S

=

iI

(hi,j)
jJ

jJ
Hi,j
A
i,
h
i,j
is not
simply an identity.
2.4. :-reduced normal forms 35
z
t
= (
t
n
).
28
Then the set
V
t
=
n

t
n

has to be non-empty (indeed the root


r
has to belong to V
t
) and nite (in the opposite case
it should be
n
=
t
n
= z = z
t
). In particular V
t
belongs to V , meaning that it can
be completely ordered by the immediate relation . Call the vertex such that _ for
all V
t
, which exists and it is uniquely dened. Then by construction
s
1
()
n
, = s
1
()
t
n
.
It means that the prole of strategies s S allows the game with simultaneous moves

to
be played, and that (at least) two distinct vertices will be identied there by a sequence of
actions (a
i,
)
ip()
A

. This is impossible according to (2.3).


Then, Lemma 14 explains that the map : S :, which associates each strategy s S
into the terminal path z : is well-dened. From here later, it will be termed outcome
function.
Denition 10. For each extensive form game = V, _, I, p, (H
i
)
iI
, (

)
1
(1) G,
dene its :-normal form as the normal form game
29
nf
:
() = I, (S
i
)
iI
, :, .
As far as the aim of this thesis is to obtain a complete characterization of behavioral
equivalence, it is natural to consider the sequence of partitions
(S
i
)
iI

iI
Part(S
i
)
obtained by behaviorally equivalent strategies. Here, for each player i I, two strategies
28
Again, the subscript is hidden to mean that such sequence can be nite or at most innite countable.
29
The normal form game is a description of a game: it is not graphical per se, but rather represents
the extensive game by way of a (possibly innite) matrix. Usually it is dened with respect to conceivable
strategies of each player, and associated payos. As far as we want to take into consideration only the rules
of the game, the denition of normal form has been restricted to terminal paths.
36 Chapter 2. Extensive Form Games
s
i
, s
t
i
S
i
are said to be behaviorally equivalent, if and only if
j I i, s
j
S
j
,
_
s
i
, (s
j
)
jI\i
_
=
_
s
t
i
, (s
j
)
jI\i
_
. (2.9)
Let us dene the equivalence relation
30
on S
i
such that s
i
s
t
i
if and only if they satisfy
(2.9).
Denition 11. For each extensive form game = V, _, I, p, (H
i
)
iI
, (

)
1
(1) G,
dene its :-reduced normal form as the normal form game
rnf
:
() = I, (S
i
)
iI
, :, ,
where S
i
= S
i
/ is the quotient space of behaviorally equivalent strategies.
Notice that the function has to be surjective by construction: indeed for each terminal
path (
n
) :, a prole of strategies (s
i
)
iI
S can be constructed such that each game with
simultaneous move
n
uniquely identies the vertex
n+1
by a prole of actions (a
i,n
)
ip(n)
.
It allows to conclude that its inverse
1
and projections proj
S
i
have to be correspondences.
Lemma 15. Given a game G which can be represented by (2.7), the following identities
hold
i I, S
i
=

(s
j
)
jI\{i}

jI\{i}
S
j
_
_
proj
S
i

_
1
(z)
_
z:
.
Proof. For each prole of strategies of the opponents (s
j
)
jI\i

jI\i
S
j
, clearly
_
_
proj
S
i

_
1
(z)
_
z:
Part(S
i
).
Indeed the inverse map of the function proj
S
i
: S
i
: allow us to obtain the obtain
the partition of S
i
which is behaviorally equivalent to the xed prole of strategies of the
opponents (s
j
)
jI\i
. Under the AC, the claim follows by Lemma 7.
Notice that, according to the Denition 11, the :-reduced normal form of each game
G is not able to recognize if a player is active somewhere with a forced move. In
30
Recall that an equivalence is relation which satises the reexive, transitive and symmetric properties.
2.4. :-reduced normal forms 37
particular, it will be useful to dene a modied version of the rnf
:
where a player is deleted
from the set of active players whenever he has only forced actions.
Denition 12. For each extensive form game = V, _, I, p, (H
i
)
iI
, (

)
1
(1) G,
dene its :-best reduced normal form as the normal form game
brnf
:
() =
_
I
t
, (S
i
)
iI
, :, proj

iI
S
i

_
,
where S
i
= S
i
/ , and I
t
= i I : [S
i
[ , = 1.
Now, it is presented an algorithm to explicitly calculate the partition S
i
, assumed that
S
i
is a nite or at most countable set in a game G:
1. Choose randomly a partition P Part(S
i
).
2. Denote r(P) the reduction of the independent sets P P with respect to behavioral
equivalence, i.e.
r(P) = P/
PP
Part(S
i
).
3. According to Lemma 7, it is well-dened the partition
r

(P) =

nN
r
n
(P),
where as usual r
0
(P) = P for all P Part(S
i
). For example, the sequence of
partitions (r
n
(P))
nN
becomes denitively constant whenever S
i
is a nite set: indeed
P is coarser than r(P), which is in turn coarser than s
i

s
i
S
i
.
4. Let P
j

jJ
Part(S
i
) the collection of all partitions of S
i
such that P
j
is coarser
than r

(P) and s
i
, s
t
i
P
j
P
j
= s
i
s
t
i
.
31
Then
32
S
i
=

jJ
P
j
.
31
In other words, it means that P
j
is a partition of S
i
such that it is coarser than r

(P), and ner than


S
i
. The advantage of this algorithm is that the reduction processes can be applied to smaller subsets of S
i
,
i.e. to each P P, allowing probably a smaller amount of computations.
32
Symmetrically, for all P
1
, P
2
Part(X), the union P
1
P
2
is dened as the nest partition
P Part(X) such that P is coarser than P
1
and P
2
. Explicitly, it represents the superior limit with
respect to the partial order of the collection of partitions, i.e. P = P
1
P
2
: P
1
P
1
, P
2
P
2
.
38 Chapter 2. Extensive Form Games
It is clear that, if S
i
is a nite set, then this algorithm ends in a nite number of steps.
More precisely, r

(P) = r
n
(P) for all integers n [S
i
[, and we can obtain r

(P) in at
most [S
i
[ steps. Moreover, the collection of (P
j
)
jJ
at point 4 has a number of elements [J[
which is smaller than the number of partitions of [1, [r

(P)[]
Z
, which is in turn smaller than
2
[r

(P)[
1 (that is, the number of non-empty subsets of [1, [r

(P)[]
Z
). Considering that
[r

(P)[ [S
i
[, the inequality [J[ < 2
[S
i
[
holds. In conclusion, if S
i
is a nite set then the
quotient space S
i
can be calculated in less than [S
i
[ +2
[S
i
[
reduction processes. Let us rene
a bit this upper bound.
Lemma 16. The following inequality holds for all positive integers n:
[Part ([1, n]
N
)[
_
n + 1
2
_
n
.
Proof. Let us verify the claim by induction. It is trivially veried for n = 1. Suppose that
it has been proved that [Part ([1, n]
N
)[ n! for some positive integer n. Then each partition
in Part ([1, n + 1]
N
) can be in form P, n where P Part ([1, n]
N
) or n belongs to some
P P. Considering that [P[ n then
[Part ([1, n + 1]
N
)[ (n + 1) [Part ([1, n]
N
)[ (n + 1)!.
Then it could be enough to prove that 2
n
n! (n + 1)
n
for all positive integers n. And this
is the case: if n is odd then
n! =

j[
1n
2
,
n1
2
]
Z
n + 2j + 1
2
=
n + 1
2

j[1,
n1
2
]
Z
_
n + 1
2
_
2
j
2
,
otherwise
n! =

j[1n,n1]
2Z+1
n + j + 1
2
=
n + 1
2

j[1,n1]
2Z+1
_
n + 1
2
_
2
j
2
.
It completes the proof, since they are clearly not greater than 2
n
(n + 1)
n
.
Of course, with heavy machinery like partial Abel summation, Laplace approximation or
asymptotic formulae of Hardy and Ramanujan, the upper bound given in Lemma 16 can be
2.4. :-reduced normal forms 39
considerably improved. Nevertheless, it is enough to prove that, if G is taken such that
I and S
i
are nite sets, then the number of steps required by such algorithm to compute the
rnf
:
() from the nf
:
() is at most

iI
[S
i
[ +
_
[S
i
[+1
2
_
[S
i
[
[I[ +

iI
[S
i
[
[S
i
[
.
Lemma 17. For each game G such that I and S
i
are nite sets, call c() the number of
comparisons between pair of strategies s
i
, s
t
i
S
i
to check if they are behaviorally equivalent.
Then
[I[ +

iI
[S
i
[ c()

iI
[S
i
[
2
/2.
Proof. As far as S
i
is a nite set for all i I, then it is enough to check which strategies
s
i
S
i
are behaviorally equivalent to a xed s
i
S
i
. In the best case S
i
/ = S
i
and it is
enough to check exactly [S
i
[ 1 equivalence relations. In the worst case S
i
/ = s
i

s
i
S
i
so that exactly
_
[S
i
[
2
_
comparisons are needed. The claim follows considering that
_
n
2
_
is not
greater than n
2
/2 for all integers n 2.
Remark 12. It should be clear now, according to this construction, why the property of
perfect recall has been assumed in the collection of games G: it is not possible from the
:-reduced normal form rnf
:
() to infer if this property has been violated or not. Take as
example the games in Figure 2.5.
A
B A
z
2
z
3
z
4
z
1
a
1
a
2
b
1
b
2
a
1
a
2
A
z
1 B
z
2
z
3
a
1
a
2
b
1
b
2
Figure 2.5: Extensive form games and
t
, respectively.
Clearly
t
satises the property of perfect recall given in (2.6), while does not. Nevertheless
nf
:
() = rnf
:
()

= rnf
:
(
t
) = nf
:
(
t
).
CHAPTER 3
A characterization of Behavioral Equivalence
3.1 The set of Invariant transformations
As far as the main result of this work aims to provide a complete characterization of behavioral
equivalence between extensive form games with imperfect information, let us introduce such
equivalence relation, which will be denoted with =. Two extensive form games ,
t
G are
said to be behaviorally equivalent if they share the same :-best reduced normal form,
1
i.e.
=
t
brnf
:
()

= brnf
:
(
t
). (3.1)
Let G Part(G) be the partition of the collection of extensive form games which is obtained
by the quotient space G/ =. It is going to be proved that two extensive form games ,
t
belong to the same member G G if and only if one can be transformed into the other one
through a sequence of predened transformations.
Denition 13. A transformation T : D
T
(G) G is dened invariant if D
T
(G) G is
1
Here, the adjective same stands for up to isomorphism, which in turn means up to relabellings of
everything, preserving its structure.
3.1. The set of Invariant transformations 41
non-empty and
D
T
(G), =T ().
In other words, a transformation is said to be invariant whenever it can be applied to
some extensive form game, so that the (best) reduced normal form with respect to terminal
paths of the transformed game is essentially the same of the original one. Any invariant
transformation T can be made surjective, restricting its codomain to some non-empty subset
of G. Indeed
T : D
T
(G) I
T
(G),
where I
T
(G) =

D
T
(G)
T (). Let T be the set of all invariant transformations. Hence,
the main question of this work can be simply rewritten as
Find all T T.
Let us combine now the construction of best-control sets given in Subsection 2.2.2 and
the structure of the information sets partition given in Section 2.3.
Denition 14. Let be an extensive form game in G. For all vertices 1
(2)
dene the
(possibly empty) set of players X

by
X

=
_
i I|
,s
1
()
:
_
V
max
,i
= s
1
()
_

_
H
i
H
i
, h

(
,V
max
,i
,i
H
i
__
. (3.2)
Hence, X

represents the set of all players which are active at least once in the subset of
vertices V [
,s
1
()
of the truncated tree
_
V [
,s
1
()
, _ [
,s
1
()
_
2
such that their best-
control sets coincides with the whole s
1
() and all the associated histories belong to the
some information set. In other words, it means that a player, which is active in the truncated
tree, belongs to the set X

if and only if he is not able to observe, according to the rules of


the game, any (prole of) action previously chosen by players in p() at the simultaneous
moves game played at vertex .
Lemma 18. If G and 1
(2)
, then the following inclusion holds
X

I[
,s
1
()
p().
2
Notice that it does not imply that a player cannot be active at vertex of the truncated tree.
42 Chapter 3. A characterization of Behavioral Equivalence
Proof. Suppose indeed that there exists a player i X

p(): according to (3.2) it is the


case that V
max
,i
= s
1
() and A
i,
= A
i,
for all ,
t
c
,s
1
(),i
. In particular it implies that
the property of perfect recall given in (2.6) does not hold. This is a contradiction, as far as
by assumption the extensive form game belongs to G.
Notice that the inclusion obtained in the Lemma 18 is stronger than the one given in (3.2),
indeed I[
,s
1
()
p() I|
,s
1
()
. Similarly, the following Denition will be convenient to
a better understanding of the two elementary invariant transformations, which are going to
be presented in a few.
Denition 15. Let be an extensive form game in G. For all vertices 1
(2)
dene the
(possibly empty) set of players Y

by
Y

=
_
i p(): a
i,
A
i,
, q(a
i,
) V
max
,i
, (H
i
H
i
, q(a
i,
) H
i
)
_
. (3.3)
Hence, Y

p() represents the set of players which are active at 1


(2)
with an available
action a
i,
A
i,
such that the control set c
,q(a
i,
),i
exists, and the associated histories
belong to some information set. In other words, it means that a player i p() belongs to
Y

if and only if there exists an action such that, whatever his opponents choose, he will
play again for sure and at each allowed terminal path he will nd always some xed set of
available actions (which has to be dierent from A
i,
as far as the game has perfect recall).
Let us start dening two invariant transformations, commonly known as Interchanging of
Simultaneous Moves and Coalescing Moves / Sequential Agent Splitting. As far as the
theoretical framework allows the existence of pair (i, ) / such that [A
i,
[ = 1, we need
to introduce also a preliminary transformation which will be dened Deletion of Forced
Moves, and call F

the set of players who has forced moves at vertex , that is


1
(1)
, F

= i p(): [A
i,
[ = 1.
3.1.1 Deletion of Forced Moves
This preliminary and trivial transformation, which is shortened with T
0
, will simply delete
the forced actions. In other words, it will remove players who are forced to be active
3.1. The set of Invariant transformations 43
according to the rules of the game. Then, the domain of T
0
is dened as
D
T
0
(G) =
_
G:

1
(1)
F

,=
_
.
Suppose that an extensive form game = V, _, I, p, (H
i
)
iI
, (

)
1
(1) belongs to D
T
0
(G).
Then there exists a vertex
0
1
(1)
such that F

0
is non-empty. The transformed extensive
form game
T
0
() = V
t
, _
t
, I
t
, p
t
, (H
t
i
)
iI
, (
t

)
1
(1)
is dened by:
1. The tree (V, _) V
std
is modied such that V
0
V
t
and equality is reached if
and only if p(
0
) = F

0
. The binary relation _ is modied accordingly, i.e. _
t
=_ [
V
.
2. The set of players may reduced, meaning that I
t
= I i F

0
: i p() = =
0
.
Except these removed players, the correspondence p
t
is constant on all other vertices.
3. For each player i I
t
and vertices 1
(1)
, simply A
t
i,
= A
i,
. The information set
partitions (H
t
i
)
iI
and the simultaneous moves games (
t

)
1
(1) change accordingly.
In rough words, the Deletion of Forced Moves transformation deletes all the actions of players
i F

0
; nothing else is modied in extensive form representation of the transformed game.
3.1.2 Interchanging of Simultaneous Moves
The domain of this transformation, which will be termed T
1
, is dened as
3
D
T
1
(G) =
_
G:

1
(2)
X

,=
_
.
Suppose that an extensive form game = V, _, I, p, (H
i
)
iI
, (

)
1
(1) belongs to D
T
1
(G).
Then there exists a vertex
0
1
(2)
such that X

0
is non-empty. The transformed extensive
form game
T
1
() = V
t
, _
t
, I
t
, p
t
, (H
t
i
)
iI
, (
t

)
1
(1)
3
A special case of this transformation T
1
is the so-called Interchange of Contiguous Simultaneous Moves
dened in (Bonanno, 1992b), which is turn is a generalization of the Thompsons transformation Interchange
of Simultaneous Moves.
44 Chapter 3. A characterization of Behavioral Equivalence
is dened by:
1. The tree (V, _) V
std
is modied such that a vertex in the truncated tree
_
V [

0
,s
1
(
0
)
, _ [

0
,s
1
(
0
)
_
is deleted if and only if the set of the players active at
is exactly X

0
and it belong the best-control set c

0
,s
1
(
0
),i
; the binary relation _ is
modied accordingly, i.e.
V
t
= V c

0
,s
1
(
0
),i
: p() = X

0
and _
t
=_ [
V
.
2. The set of players does not change, meaning that I
t
= I; but some of them, the ones
playing in c

0
,s
1
(
0
),i
, are shifted back, meaning that
p
t
() =
_

_
p() if 1
(1)

0
c

0
,s
1
(
0
),i
_
,
p() X

0
if =
0
,
p() X

0
otherwise.
3. For each player i I
t
and vertices 1
(1)

0
such that i p
t
(), simply A
t
i,
= A
i,
.
Otherwise
i X

0
, c

0
,s
1
(
0
),i
A
t
i,
0
= A
i,
.
The information set partitions (H
t
i
)
iI
and the simultaneous moves games (
t

)
1
(1)
change accordingly.
In rough words, the Interchanging of Simultaneous Moves transformation moves all the
actions of player i X

0
, which cannot distinguish by construction any chosen move at vertex

0
, to the vertex
0
itself. Other vertices disappear if and only if the set of active players
of the associated simultaneous moves games is X

0
. An example of this transformation is
shown in Figure 4.10.
Remark 13. Notice that the transformation T
1
does not essentially modify the structure of
the information set partitions. It means that if D
T
1
(G) then
i I, H
t
i

= H
i
.
3.1. The set of Invariant transformations 45
3.1.3 Coalescing Moves / Sequential Agent Splitting
In a similar fashion, the domain of this transformation, which will be termed T
2
, is dened
as
D
T
2
(G) =
_
G:

1
(2)
Y

,=
_
.
Suppose that an extensive form game = V, _, I, p, (H
i
)
iI
, (

)
1
(1) belongs to D
T
2
(G).
Then there exists a pair (i
0
,
0
) I 1
(2)
such that i
0
Y

0
. The transformed extensive
form game
T
2
() = V
t
, _
t
, I
t
, p
t
, (H
t
i
)
iI
, (
t

)
1
(1)
is dened by the application of the following algorithm for all players in Y

0
:
1. The tree (V, _) V
std
is modied such that a vertex in the truncated tree
_
V [

0
,s
1
(
0
)
, _ [

0
,s
1
(
0
)
_
is deleted if and only if the set of the players active at is a
singleton and it belong the control set c

0
,q(a
i
0
,
0
),i
0
; the binary relation _ is modied
accordingly, i.e.
V
t
= V c

0
,q(a
i
0
,
0
),i
: [p()[ = 1 and _
t
=_ [
V
.
2. The set of players does not change, meaning that I
t
= I; but i
0
is shifted back,
meaning that
p
t
() =
_
_
_
p() if 1
(1)
c

0
,q(a
i
0
,
0
),i
0
,
p() i
0
otherwise.
3. For each player i I
t
and vertices 1
(1)

0
such that i p
t
(), simply A
t
i,
= A
i,
.
Otherwise
i X

0
, c

0
,q(a
i
0
,
0
),i
A
t
i
0
,
0
= (A
i
0
,
0
a
i
0
,
0
) A
i
0
,
.
The information set partitions (H
t
i
)
iI
and the simultaneous moves games (
t

)
1
(1)
change accordingly.
46 Chapter 3. A characterization of Behavioral Equivalence
Loosely speaking, the Coalescing Moves transformation
4
shifts the actions of each player
i Y

0
at each c

0
,q(a
i
0
,
0
),i
to the vertex
0
itself, substituting the pure action a
i
0
,
0
.
Vertices in c

0
,q(a
i
0
,
0
),i
disappear if and only if the player i
0
is the unique active player in the
associated simultaneous moves games. An example of this transformation is shown in Figure
4.11.
3.1.4 Composition of transformations
Let us dene how a sequence of transformations T
0
, T
1
and T
2
can be applied one by one,
and when such operation is possibile.
Denition 16. For all = (
1
, . . . ,
n
) 0, 1, 2
n
, dene the composition-transformation
T

: D
T
(G) G by
D
T
(G), T

() =
_
T
n
T

n1
. . . T

1
_
(),
where its domain is recursively dened by
D
T
(G) = D
Tn
(G) T

n1
_
D
T
(
1
,...,
n1
)
(G)
_
.
The construction of the domain D
T
(G), since it is equivalent to require that the last
transformation T
n
can be applied and the extensive form game which is in the argument
argument has to be in the image set I
T
(
1
,...,
n1
)
(G). Apart from some these formal Denitions,
notice that it has not been even shown that transformations T
0
, T
1
or T
2
are invariant.
3.2 Necessary and sucient conditions
Although it does not solve the main question to nd all invariant transformations, it can be
proved that each T

is an invariant one.
4
Sequential Agent Splitting transformation stands for the inverse of Coalescing Move: If the latter is
represented by T
2
, then the former is T
1
2
.
3.2. Necessary and sucient conditions 47
Lemma 19. The compositions of Deletion of Forced Moves, Interchanging of Simultaneous
Moves and Coalescing Moves are invariant transformations, that is

nN
>0

0,1,2
n
T

T.
Proof. Let us rewrite the claim as T

T whenever 0, 1, 2
n
, for some positive integer
n, and start to prove it by induction. As basic step, if n = 1 then T
0
, T
1
and T
2
have to
belong to T. It is straightforward for T
0
. Once all possible transformations T
0
took place,
the equivalence relation =
t
collapses to rnf
:
()

= rnf
:
(
t
). Hence, on the one hand,
according to the Denition of T
1
given in Subsection 3.1.2, the transformed extensive form
game T
1
() has exactly the same set of strategies S
i
for all players i I, meaning that
D
T
1
(G), nf
:
() = nf
:
(T
1
()) .
In particular, it implies that rnf
:
()

= rnf
:
(T
1
()), so that there exists G G such
that , T
1
() G; hence T
1
has to be an invariant transformation. On the other hand,
according to the Denition of T
2
given in Subsection 3.1.3, the transformed extensive form
game T
2
() has not the same set of strategies, i.e. S
i
,= S
t
i
for at least a player i I, but it
is clear from the construction that o
i

= o
t
i
for all i I. It means that
( D
T
2
(G), rnf
:
()

= rnf
:
(T
2
())) = T
2
T.
Then, suppose there exists a positive integer m such that

n[1,m]
N

0,1,2
n
T

T.
Let us x a vector = (
1
, . . . ,
m+1
) 0, 1, 2
m+1
. By the Denition 16 of composition
transformation, we have T

= T

m+1
T
(
1
,...,m)
and its domain veries
D
T
(G) = D
T
m+1
(G) I
T
(
1
,...,m)
(G) D
T
m+1
(G).
At the same, it has been already shown that T

m+1
is an invariant transformation, and it has
been assumed by the inductive hypothesis that T
(
1
,...,m)
T. It means that
D
T
(G),
_
T
(
1
,...,m)
() =T

()
_

_
=T
(
1
,...,m)
()
_
.
Since the equivalence relation = is transitive, there exists G G such that , T

() G,
48 Chapter 3. A characterization of Behavioral Equivalence
i.e. T

T.
Remark 14. It should be clear from the proof of Lemma 19 that the the inductive
argument is only a mask, in the sense the core is represented by the fact that T
1
and T
2
are indeed invariant transformations. From this perspective, the composition of invariant
transformations
jJ
T

j
, where
j
0, 1, 2 for all j J and J is not necessarily nite set,
has to be an invariant transformation as well. In general terms, it can be rewritten as
_
J,=
_
(
j
)
jJ
0,1,2
J
_

jJ
T

j
_
T.
It is going to be shown now that it is possible to reach a kind of minimal extensive
form game through a sequence of applications of transformations T
1
and T
2
.
5
With this aim,
for all extensive form games D
T
0
(G) D
T
1
(G) D
T
2
(G) dene the non-empty set

=
_
(
j
)
jJ
: J ,= , D
(
j
)
jJ
(G)

0,1,2
(D
T

(G) I
T
(
j
)
jJ
(G))
_
.
In other words,

represents the set of all (possibly innite) sequences of transformations


T
0
, T
1
and T
2
such that the new extensive form game T
(
j
)
jJ
() cannot be transformed once
more by some T
0
or T
1
or T
2
.
Lemma 20. The minimal extensive form game is uniquely dened, i.e.

_
j1,2,3
D
T
j
(G),

()

= 1.
Proof. If an extensive form game belongs to D
T
0
(G) D
T
1
(G) D
T
2
(G), then at least one
invariant transformation between T
0
, T
1
and T
2
can be applied, i.e.

1
(2)
X

,=
or

Z
(1)
F

,= . Notice now that, according to constructions given in Subsections


3.1.1, 3.1.2 and 3.1.3, the application of a transformation has no eects on the potential
application of the other one: they apply jointly independently. For the transformation T
0
the argument is trivial. The same cannot be said about the eect of a transformation about
the potential application of the same transformation, on the same vertex 1
(2)
. But the
5
According to Remark 14, such sequence has not to be necessarily nite.
3.2. Necessary and sucient conditions 49
denitions of these transformations rely on the notion of control-set given in 2.2.2, which
are uniquely dened in a way such that they are as near as possible to the vertex 1
(2)
under consideration. It implies that the application of a transformation in the set T
1
, T
2
,
whenever possible, has no eects on the application of the other transformation and the
same transformation on other vertices 1
(2)
. Such independence is enough to prove the
claim.
A remarkable example which highlights such independence property and the relation with
the features of the extensive form games is given in Figure 3.1.

r
z
1
z
2

1
z
3

2

3

4
z
5
z
4
z
7
z
6
Figure 3.1: An extensive form game such that T
2
can be applied twice.
Suppose that the game is played by two players, let us say A and B, each node has exactly
one active player and that player B is active only at vertex
2
. Moreover, suppose it is the
case that there exists H H
A
such that h

1
, h

3
, h

4
H.
6
Then transformation T
2
can
be applied to the root
r
and to the vertex
1
. Again, these transformations can be applied
independently, but the resulting extensive form game will have an action, that is q
1
(z
3
),
which appears twice in the minimal form.
The problem comes from the fact that the condition h

1
h

3
violates the property of perfect
recall stated in (2.6), i.e. this extensive form game does not belong to G.
6
Such condition is equivalent to A
A,1
= A
A,3
= A
A,4
, i.e. player A is not able to realize in which
vertex of the tree he is playing, except for the root.
50 Chapter 3. A characterization of Behavioral Equivalence
According to Lemma 20, the minimal extensive form game can be nally dened by
: G G

_
_
_
T
(
j
)
jJ
() if

j0,1,2
D
T
j
(G) and (
j
)
jJ

,
otherwise.
It is clear that all the above Denitions and Lemmas can be restated in a simpler form to
avoid the transformation T
0
, assuming ex-ante that the following implication holds:
1
(1)
, i p() = [A
i,
[ 2.
Lemma 21. There exists a bijective map : brnf
:
(G) (G).
Proof. On the one hand, it is clear that if an extensive form game (G) has been xed
then its (best) reduced normal form with respect to terminal paths brnf
:
() is uniquely
identied, according to Denition 12. On the other hand, suppose that I, (o
i
)
iI
, :,
brnf
:
(G) has been xed. It has to be shown that there exists a unique (G) such that
7
i I, [o
i
[ , = 1 rnf
:
() = I, (o
i
)
iI
, :, .
With the same line of reasoning of Lemma 15, dene the sequence of partitions (P
i
)
iI

iI
Part(o
i
) by
i I, P
i
=

(s
j
)
jI\{i}

jI\{i}
S
j
_
_
proj
S
i

_
1
(z)
_
z:
. (3.4)
If P
i
= o
i
then player i is not active at the vertex
r
, meaning that p(
r
) = i I : P
i
,= o
i
.
Moreover, it is clear that if i is active then A
i,r

= P
i
, and in particular [A
i,r
[ = [P
i
[. At
this point the set of immediate successors are completely specied, as far as s
1
(
r
)

= A
r
.
Such algorithm can be repeated as much as necessary
8
to complete the extensive form
7
Recall that the condition (G) is equivalent to G

j{0,1,2}
D
Tj
(G).
8
Since belongs to G then its tree (V, _) belongs to V
std
, and in particular such algorithm could be
repeated at most countably many times. Also in such case the extensive form game (brnf
Z
()) is uniquely
dened, otherwise there should exist a vertex which is nearest to the root and such that the sequences of
partitions obtained in (3.4) dier, and this is not possible.
3.2. Necessary and sucient conditions 51
representation of the game in its minimal form (indeed, the existence of forced actions
cannot be deduced from the :-best reduced normal form).
This Lemma will be the key for the proof of the main theorem, the characterization of all
invariant transformations. Moreover, the following result gives insights on what will be the
conclusion of this work.
Lemma 22. Let ,
t
G be two extensive form games. Then
=
t
()

= (
t
).
Proof. From the denition of the equivalence relation = given in (3.1), the claim can be
rewritten as
,
t
G, brnf
:
()

= brnf
:
(
t
) ()

= (
t
).
If part. Suppose that ()

= (
t
). Recall that () represents the minimal extensive
form T
(
j
)
jJ
() for some (
j
)
jJ

(whenever at least one transformations in T


j

j0,1,2
can be applied, otherwise () = ); and that

J,=

(
j
)
jJ
0,1,2
J
_

jJ
T

j
_
T
according to Lemma 19 and Remark 14. It is enough to conclude that brnf
:
()

= brnf
:
(
t
).
Figure 3.3 shows a graphical representation of this part of proof, where red lines stand for
isomorphic to.
() rnf
:
(()) brnf
:
(()) brnf
:
()
(
t
) rnf
:
((
t
)) brnf
:
((
t
)) brnf
:
(
t
)
=
T
1
, T
2
Assumption
Claim
=
T
0
=
Figure 3.2: Structure of the if part of Lemma 22.
52 Chapter 3. A characterization of Behavioral Equivalence
Only if part. Suppose that brnf
:
()

= brnf
:
(
t
). Thanks to Lemma 21, we have
(brnf
:
())

= (brnf
:
(
t
)). The map is invertible, so these extensive form-images are
uniquely dened in the set of minimal representations (G). This is enough to conclude the
proof.
brnf
:
() (brnf
:
()) ()
brnf
:
(
t
) (brnf
:
(
t
)) (
t
)
=
Assumption
Claim
=
Figure 3.3: Structure of the only if part of Lemma 22.
Finally, all ingredients are ready to cook the following.
Theorem 1. The set of all invariant transformation is given by
T =
_
J,=
_
(
j
)
jJ
0,1,2
J
_

jJ
T

j
_
.
Proof. It has been already shown in Lemma 19 and Remark 14 that

J,=

(
j
)
jJ
0,1,2
J
_

jJ
T

j
_
T.
Hence, suppose for the sake of contradiction that there exists an invariant transformation T
such that T T

J,=

(
j
)
jJ
0,1,2
J
_

jJ
T

j
_
. In particular, we must have D
T
(G) ,=
and
D
T
(G), =T (),
which in turn means brnf
:
()

= brnf
:
(T ()). According to Lemma 22, it happens if and
only if ()

= (T ()). But is the minimal extensive form representation through some
3.2. Necessary and sucient conditions 53
sequence of transformations in the set T
j

j0,1,2
. It implies that T can be represented in
the form
jJ
T

j
for some sequence (
j
)
jJ
: it is the wanted contradiction.
Actually, it means that the equivalence relation = is completely characterized. In particular,
an interesting corollary can be stated.
Corollary. Let ,
t
G such that each active player has no forced actions. Then they
share the same :-reduced normal form if and only if they can be transformed into each
other through a sequence of Interchanging of Simultanoues Moves and Coalescing Moves /
Sequential Agent Splitting.
Proof. In other words, ,
t
G are two extensive forms such that

1
(1)
(1
(1)
)
F

= .
The claim can be rewritten as rnf
:
()

= rnf
:
(
t
) if and only if
T , T
t

J,=

(
j
)
jJ
1,2
J
_

jJ
T

j
_
, T ()

= T
t
(
t
).
According to our assumptions, the transformation T
0
has no way to apply in such games.
Then rnf
:
() = brnf
:
() and rnf
:
(
t
) = brnf
:
(
t
), and the minimal extensive form
representations () and (
t
) are obtained necessarily through some sequence of T
1
and
T
2
. The claim follows by Theorem 1.
At this point, it may be interesting to check how many transformations are necessary
to obtain the minimal extensive form representation. According to the costruction of the
domains of the transformations T
j

j0,1,2
we have that the total number of transformations
are exactly

_
1
(1)
: F

,=
_

_
1
(2)
: X

,=
_

_
1
(2)
: Y

,=
_

,
which is upper bounded by [1
(1)
[ +2[1
(2)
[. In particular, if V is a nite set then such number
is smaller than 3[V
(1)
[.
It is also remarkable that all the proofs of mentioned works in Section1.2 rely on the
niteness of the set V through some nite invariant of the form f() =

v1
(2)
[XY[
, with
54 Chapter 3. A characterization of Behavioral Equivalence
G. It is clear that if J is a non-empty set then
j J, T
j
T = f (
jJ
T
j
()) f () [J[.
Since the left hand side has to be a non-negative integer, the minimal extensive form has to
be reached in a nite number of steps, which is upper bounded by [J[ f ().
3.3 Extension to chance moves
As Theorem 1 seems to be the mirror of the original work made by Thompson (1952) for the
equivalence relation = which is dened with respect to terminal paths :, it looks natural
that a similar result can be obtained as counterpart of the extended model with chance
moves given by Kohlberg and Mertens (1986). Apart from the intuition, some technicalities
have to be faced. To start with, a rather dierent notion of extensive game has to be
dened. Dierently from the tuple given in (2.7), an extensive game with chance moves and
imperfect information is described by a tuple of the form

V, _, I, p, (H
i
)
iI
, (

)
1
(1) , (

)
1
(1)
_
, (3.5)
such that (V, _) V
std
and the property of perfect recall given in (2.6) is satised. In
addition, the (unique) chance player veries
1
(1)
, p()

(A
,
) .
This collection of extensive games will be denoted with G

. According to Kreps (1990, p.358),


it is reasonable to assume the following rule:
Fundamental rule of decision trees. A chance node precedes a choice node in a
tree if and only if the uncertainty represented in the chance node resolves in the mind of the
decision maker prior to the time at which the choice must be made.
In a formal way, the fundamental rule of decision trees can be rewritten as
(H
i
H
i
, (h

, h

H
i

t

tt
)) =
_
a
,
A
,
, v
t
, v
tt
V [
,q(a,)
_
.
3.3. Extension to chance moves 55
for all ,
t
,
tt
1
(1)
and all i I . Notice that it is allowed also the case G

such
that I = , i.e. only the chance player is active at each non-terminal node 1
(1)
. The
property of perfect recall (2.6) has to hold for all players i I . For each extensive form
game with chance moves G

its :-normal form is dened by


nf

:
() =

I , (S
i
)
iI\
, :,
_
,
where : S (:). Here represents the function from the set of strategies to the lotteries
of terminal paths induced by the sequence (

)
1
(1)

1
(1)
(A
,
). In other words, it
naturally generalizes Lemma 14. In a similar fashion, the normal form variants rnf

:
and
brnf

:
are dened, substituting the set of players I with I , and the map with .
9
Notice that if z = (
n
) : is a terminal path, then
n
has to be at most a countable
set, since it has been assumed (V, _) V
std
.
10
Therefore, according to Royden (2010), the
measure

z
=
n\Z
(0)

has to be a probability measure as well, and it is uniquely dened. It will be useful also to
dene the truncation at
t

n
by

z
[

n\Z
(0)
:

.
In few words, it just considers the product measure as if the terminal path z : has its root
at the truncated tree with vertex
t

n
1
(1)
. This notation is convenient to model the
case where only the chance player is active in some truncated tree
_
V [
,s
1
()
, _ [
,s
1
()
_
,
that is equivalent to I[
,s
1
()
= for some 1
(1)
. In such case, indeed, the situation can
be represented as if the chance plays instantaneously a random choice, to reach allowed
terminal paths. Then, a new probability measure

is needed, and it is naturally dened by


_
z:(V [
,s
1
()
,[
,s
1
()
)
d
z
[

. From this construction, the probability measure

belongs to

_
:
_
V [
,s
1
()
, _ [
,s
1
()
__
. Moreover, these measures are usually not dened for all non-
9
In a certain way, the function can be represented through isomorphism with a map whenever its
codomain is a subset of
det
(:) =
z

zZ
. Notice that is I is nite than the function cannot be
surjective. Suppose for the sake of contradiction that (S) = (:). Then [R[ [(:)[ = [(S)[ [1
(1)
[
|I|
.
This is impossible since (V, _) V
std
= [1
1
[ [N[, and in this case [R[ [1
(1)
[
|I|
[N[
|I|
= [N[.
10
For each terminal path z = (
n
) :, the set of vertices
n
belongs to V and the claim follows by
Lemma 3.
56 Chapter 3. A characterization of Behavioral Equivalence
terminal nodes. That is why it is necessary to dene 1

as the subset of non-terminal node


1(1) such that
11
1

= 1
(2)
:
t
s
1
() V
(1)
, I[

,s
1
(

)
=
1
(2)
:
t
s
1
() V
Z-n
, I[

,s
1
(

)
= .
To explain the intuition, the set 1

stands for the set of non-terminal vertices such that, for


some immediate successors, every simultaneous moves games will be played only by up to
reach every allowed terminal paths and it is as near as possible to the well-dened set of
nite terminal nodes Z
(0)
V
Z-n
. The meaning of such denition will be clear in a few.
As before, the counterparts of sets as X

or Y

need to be dened. Precisely


1
(1)
, N

= a
,
A
,
: (a
,
) = 0,
and
V

, M

= a
,
A
,
:
t
,
tt
q(a
,
),

.
In rough words, the set N

stands for the greatest subset of available actions of the chance


player at the non-terminal node 1
(1)
such that the probability that this random device
will choose one of those actions is exactly zero. Since that the basic trick of the forthcoming
result follows the same line of reasoning of the proof of Theorem 1, it is natural that it is
going to be used a transformation which deletes all such possible subsets. Moreover, the
subset M

represents the greatest subset of available actions of the chance player at the
non-terminal node 1

such that, whenever the chance player chooses an action of this


set, he will be always the unique active player until some terminal node will be reached and
the product probability measures are isomorphic to each other, to mean that the structures
of the probability measure over the allowed terminal paths are essentially the same.
12
Again,
it seems natural that it is needed a transformation which collects all this consecutive random
choices up to terminal nodes.
13
Let us prove a preliminary result about the properties of these probability measures on
11
Notice that I[
,s
1
()
= is equivalent to the proposition

is well-dened.
12
In particular the isomorphism

implies [supp

[ = [supp

[. The converse is obviously false.


13
Or better, from vertex 1
(2)
up to each terminal path (
n
) : such that
n
.
3.3. Extension to chance moves 57
this theoretical framework.
Lemma 23. For all games G

and vertices 1
(2)
, the probability measure

is
atomic, that is
1
(2)
, a
,
A
,
,

(a
,
) > 0.
Proof. By construction

is a probability measure dened on (A


,
). Suppose for the
sake of contradiction that

(a
,
) = 0 for all a
,
A
,
. Notice that the assumption
1
(2)
implies s
1
() 1
(1)
. Since G

, the set of non-terminal vertices 1


(1)
is at most
countable. In particular also s
1
() has to be at most countable. It implies that
1 =

(A
,
) =

_
_
_
a,A,
a
,

_
_
=

a,A,

(a
,
) = 0,
which is a contradiction.
The assumption 1
(2)
is fundamental in the proof of Lemma 23. Indeed, it can be easily
proved that there exist games G

such that

is non-atomic for all V


(1)
. Finally,
everything is ready to dene the new transformations, and therefore to extend the result
provided by Kohlberg and Mertens (1986).
3.3.1 Deletion of Impossible Chance Moves
The domain of this transformation, which will be termed T
1
, is dened as
D
T
1

(G

) =
_
G

1
(1)
N

,=
_
.
Suppose that an extensive form game with chance moves , which is represented by

V, _, I, p, (H
i
)
iI
, (

)
1
(1) , (

)
1
(1)
_
, belongs to D
T
1

(G

). Then there exists a vertex

0
1
(1)
such that N

0
is non-empty. The transformed extensive form game with chance
moves
T
1
() =

V
t
, _
t
, I
t
, p
t
, (H
t
i
)
iI
, (
t

)
1
(1) , (
t

)
1
(1)
_
is dened by:
58 Chapter 3. A characterization of Behavioral Equivalence
1. The tree (V, _) V
std
is modied such that the vertices which strictly follow
0
are
deleted, i.e.
V
t
= V V :
0
and _
t
=_ [
V
.
2. Everything else is kept xed.
In rough words, the Deletion of Impossible Chance Moves transformation deletes a set of
vertices which will be never reached whenever the game is played.
3.3.2 Coalescing Chance Moves
The domain of this transformation, which will be called T
2
, is dened as
D
T
2

(G

) =
_
G

M,=
_
.
Suppose that an extensive form game with chance moves , which is represented by

V, _, I, p, (H
i
)
iI
, (

)
1
(1) , (

)
1
(1)
_
, belongs to D
T
2

(G

). Then there exists a vertex

0
1
(2)
such that M

0
is non-empty. The transformed extensive form game with chance
moves
T
2
() =

V
t
, _
t
, I
t
, p
t
, (H
t
i
)
iI
, (
t

)
1
(1) , (
t

)
1
(1)
_
is dened by the following algorithm, which has to be repeated for all a
,
0
M

0
A
,
0
:
1. The structure (V, _) V
std
is invariant except its the truncated tree
_
V [

0
,q(a,
0
)
, _ [

0
,q(a,
0
)
_
in the unique way such that
i p(
0
, A
t
i,
0
= A
i,
0
and
A
t
,
0

= (A
,
0
a
,
0
) A, with A

= :
_
V [

,s
1
(

)
, _ [

,s
1
(

)
_
,
t
q(a
,
0
).
2. Everything else is kept xed.
In rough words, the Coalescing Chance Moves transformation regroups the set of vertices
which will be player for sure only the chance player up to every allowed terminal node or
innite terminal path.
3.3. Extension to chance moves 59
3.3.3 The main result
In Section 3.1 the set of invariant transformations T has been dened as the set of
transformations which have a non-empty domain in G and such that the bnrf
:
is kept
invariant after each transformation, whenever it is applied. Similarly, here T

represents
the set of all invariant transformations with chance moves such that
T T

(D
T
(G

) ,= D
T
(G

) , brnf

:
()

= brnf

:
(T ())) .
Clearly, transformations in T
j

j0,1,2
do not belong to T

because the arguments of their


domains have to be extensive form games in the collection G, i.e. with a dierent structure
from the one considered here. Nevertheless, they can be naturally extended to this theoretical
framework in the unique way so that the strategic features of the chance player are kept
invariant after each transformation.
14
Let us call these extended transformations T
0
, T
1

and T
2
.
Theorem 2. The set of all invariant transformations with chance moves is given by
T

=
_
J,=
_
(
j
)
jJ
2

,1

,0

,1

,2

J
_

jJ
T

j
_
.
Proof. The proof will be on the same line of the one gives in Theorem 1. It looks clear that
by construction the Deletion of Impossible Chance Moves and the Coalescing Chance Moves
transformations essentially leave the :-best reduced normal form invariant. As in Remark
14, also their compositions do. Hence,

J,=

(
j
)
jJ
2

,1

,0

,1

,2

J
_

jJ
T

j
_
T

.
Suppose for the sake of contradiction that there exists an invariant transformation T such that
T T

J,=

(
j
)
jJ
2

,1

,0

,1

,2

J
_

jJ
T

j
_
. In particular, we must have D
T
(G

) ,=
and
D
T
(G

), brnf

:
()

= brnf

:
(T ()) .
Again, for all G

it is uniquely dened a minimal extensive form with chance


14
In particular, if an extended transformation is applied to a pair (i, ) / then i ,= .
60 Chapter 3. A characterization of Behavioral Equivalence
moves representation, let us say

(): the argument is similar to the one provided


in Lemma 20, noticing that each transformation can be applied at most once at each
non-terminal vertex, and they always apply jointly independently. On the one hand,
this minimal form is obtained only through sequences of transformations of the form

J,=

(
j
)
jJ
2

,1

,0

,1

,2

J
_

jJ
T

j
_
. On the other hand, the wanted contradiction is
given by

(G

)

= brnf

:
(G

) .
Dierently from Lemma 22, the existence of a bijection between these sets does not follow
exactly the same argument. Everything will be solved answering the following:
How to dene an injective map : brnf

:
(G

(G

)?
Suppose that a normal form brnf

:
() has been xed. Then it will be on the form
brnf

:
() =

I
t
, (S
i
)
iI

\
, :,
t
_
,
where S
i
= S
i
/ , I
t
= i I : [S
i
[ ,= 1 and
t
= proj

iI

\{}
S
i
. Let X be
the collection of all subsets X : such that
s, s
t

iI

\
S
i
, (
t
(s)) (X) = (
t
(s
t
)) (X). (3.6)
Obviously , : X. Moreover, suppose that (X
n
)
nN
X
N
. Then

nN
X
n
belongs to
X as well. It proves that X is a -algebra on the space of terminal paths :. As far as X
is the nest -algebra of : such that property (3.6) holds, then it is clear that the chance
player is active at vertex
r
(with at least two chance moves in supp
r
) if and only if
X ,= , :. Then, it is well-dened a probability measure
: X [0, 1],
X (
t
(s)) (X)
for some s

iI

\
S
i
. Thanks to Lemma 23, the probability measures

have to be
atomic for all 1
(2)
. It means that if 1
(2)
, there exists a set z
n
:, which is nite
3.3. Extension to chance moves 61
or at most countable,
15
such that
supp

= z
n
,
or equivalently (z
n
) = X (Royden, 2010). Since

(z) can be uniquely dened for


all z z
n
by (3.6), we showed a way to construct the probability measure
r
. After
this identication, the set of active players without forced actions can be found with the
same method proposed in the proof of Lemma 22. At this point, p(
r
) and A
i,r

ip(r)
are uniquely dened. It is enough to repeat this algorithm for s
1
(
r
), and countable many
times for all non-terminal nodes 1
(1)
. Whenever a vertex Z
(1)
is reached, the
support of the probability measure

is allowed to be an uncountable set. Nevertheless, it


is uniquely dened on the -algebra X and this algorithm will not be repeated for terminal
nodes s
1
() Z
(0)
. The proof is complete.
Corollary. Let ,
t
G

such that each active player has no forced actions and every
chance moves has positive probability. Then they share the same :-reduced normal form
with chance moves if and only if they can be transformed into each other through a sequence
of Interchanging of Simultanoues Moves, Coalescing Moves and Coalescing of Chance Moves.
Proof. In other words, ,
t
G

are two extensive form games with chance moves such that

1
(1)
(1
(1)
)
(F

) = .
The claim can be rewritten as rnf

:
()

= rnf

:
(
t
) if and only if
T , T
t

J,=

(
j
)
jJ
2

,1

,2

J
_

jJ
T

j
_
, T ()

= T
t
(
t
).
According to our assumptions, the transformations T
0
and T
1
have no way to apply in
such games. It implies that rnf

:
() = brnf

:
() and rnf

:
(
t
) = brnf

:
(
t
), therefore the
minimal extensive form representations

() and

(
t
) are obtained necessarily through
some sequence of T
1
, T
2
and T
2
. The claim follows by Theorem 2.
15
Again, the index of the set is skipped to mean that both cases are possible.
CHAPTER 4
Invariance of Solution Concepts
The next stage is the investigation of solution concepts types which are preserved across
each one of the invariant transformations analyzed in Section 3.1, and generally the ones
provided in the original work of Thompson (1952). Given their importance, transformations
across which particular solution concepts are invariant are especially interesting. There is
no single property dening equivalence of games, but rather there are dierent amounts
of structure which can be included in the model, and correspondingly dierent equivalence
notions: e.g., temporal structure is not invariant across Thompsons transformations, and
neither any solution concept which depends upon the temporal order in which information
is revealed. Hence, this section addresses the questions posed by many authors, for example
Bonanno (1992b) or Hoshi and Isaac (2010).
At the same time, it can be easily realized how essential to the game theory perspective
the consequence functions are, together with the preference relations of each player. The
paramount game theoretic questions here are going to involve solution concepts, and so the
payo function will be relevant. Then let us consider games which can be represented by
the tuple
V, _, I, p, (H
i
)
iI
, (

)
1
(1) , (u
i
)
iI
(4.1)
such that V, _, I, p, (H
i
)
iI
, (

)
1
(1) G, so that in particular (V, _) V
std
and perfect
4.1. Renements of equilibrium concepts 63
recall (2.6) holds. Here u
i
:

iI
S
i
R represents the utility function of player i I. It
will be useful to dene also its extended form, i.e.
i I, U
i
: (S) R,

_
sS
u
i
(s) d(s).
Throughout this Chapter, it will be assumed that the set of players is nite or at most
countable. Moreover, a kind of abuse of notation is going to be made, to ease the notation.
The collection of games of the form is still called G. Similarly, the set of invariant
transformation T is still denoted with T, and T
1
, T
2
, T
3
, T
4
represent respectively the four
Thompsons transformation: Interchanging of Simultaneous Moves, Coalescing Moves /
Sequential Agent Splitting, Addition of a Superuous Move and Ination / Deation.
4.1 Renements of equilibrium concepts
The most basic equilibrium concept was dened by Nash (1951). It assumes that each player
has correct beliefs about the prole of strategies of their opponents, and obviously that there
is no incentive to deviate from their own equilibrium strategy.
Denition 17. For all games G, dene A
Nash
() the set of Nash equilibrium proles,
that is
A
Nash
() =
_
s

iI
S
i
: i I, s
i
S
i
, u
i
(s

i
, s

i
) u
i
(s
i
, s

i
)
_
.
Lemma 24. The set of Nash equilibrium is invariant to each one of the four Thompsons
transformations:
T T, D
T
(G), A
Nash
() = A
Nash
(T ()) .
Proof. According to Thompsons result, there exists a non-empty set J such that T =

(
j
)
jJ
1,2,3,4
J T

j
. Hence it is enough to prove that
j 1, 2, 3, 4, D
T
j
(G), A
Nash
() = A
Nash
_
T

j
()
_
.
By denition of invariance transformation, each one of them leave the reduced normal form
64 Chapter 4. Invariance of Solution Concepts
unchanged. It means that
1
j 1, 2, 3, 4, D
T
j
(G), rnf ()

= rnf
_
T

j
()
_
.
On the one hand. according to Denition 17, the Nash equilibrium is dened on the normal
form representation of the game. On the other hand, the reduced normal form simply deletes
equally preferable strategies by construction. The claim follows.
After its introduction, it was attacked from dierent sides against its too permissive
character. For example, it does not take into account the possibility of events where players
fail to act rationally. Hence, Myerson (1978) proposed a renement with the following.
2
Denition 18. A prole (


iI
(S
i
) is dened -proper equilibium if
i I, s
i
, s
t
i
S
i
, supp

i
= S
i
U
i
_

s
i

i
_
> U
i
_

i
_
=

i
(s
i
)

i
(s
t
i
) .
Let A
Proper
() be the set of proper equilibrium, i.e. the set of all


iI
(S
i
) such that
there exists a sequence of (

which converges to

.
Lemma 25. The set of proper equilibrium is invariant to each one of the four Thompsons
transformations:
T T, D
T
(G), A
Proper
() = A
Proper
(T ()) .
Proof. Following the same line of reasoning of the proof of Lemma 24, it is enough to prove
that
j 1, 2, 3, 4, D
T
j
(G), A
Proper
() = A
Proper
_
T

j
()
_
.
A proper equilibrium needs to be the limit point of some sequence of -proper equilibrium.
By assumption each one of them has to be fully mixed. At this point a new sequence of
-proper equilibrium can be obtained in the reduced normal form, simply assigning the sum
of probabilities of equivalent strategies to its representative element, and it will converge to
the same limit point. The proof is complete.
1
There is no subscript because the it is going to be used the (standard) reduced normal form, which is
not dened with respect to terminal paths (or terminal nodes, in the case of games with nite V ).
2
The notion of proper equilibrium renes in turn the one of Trembling Hand Perfection provided by
Selten (1975).
4.1. Renements of equilibrium concepts 65
4.1.1 Subgame Perfect Equilibrium
Consider the extensive form game represented in Figure 4.1. According to Denition 17,
the set of Nash equilibrium is given by A
Nash
() = (y, a), (x, b).
A
1, 1
B
2, 2 0, 0
x y
a
b
Figure 4.1: A Nash equilibrium which is not reasonable.
The equilibrium (x, b) clearly highlights the ineptitude of this concept to represent situations
of erring players: suppose that the equilibrium of the game prescribes (x, b), and player A
deviated for some reason. The equilibrium (x, b) still requires player B to play b, which is
clearly not his optimal choice. The problem relies on the fact a strategy is thought to be a
kind of prescription to a player on what to do at all possible information sets: Since in a non-
cooperative game binding agreements are not possible, the solution of such a game has to be
self-enforcing (van Damme, 1983, Preface). Indeed, the Nash equilibrium and the Myersons
Proper equilibrium are essentially dened on the normal form representations. Therefore,
the notion of Subgame Perfect Equilibrium proposed by Selten (1965) mirrors the one of
Nash equilibrium for dynamic games. It relies on the concept of subgame, i.e. every part
of extensive form game which is constructed on the truncated tree
_
V [
,s
1
()
, _ [
,s
1
()
_
for
some 1
(1)
such that it is closed under the information sets and
i p(), H
i
H
i
, h

= H
i
,
meaning that the histories associated with the root are the only members of that nodes
information sets. Denote with / the set of all possibile subgames. Clearly, if G has
perfect information, then every non-terminal node 1
(1)
generates a subgame. Conversely,
it can be the case that the game itself is the unique subgame: for example, the game
66 Chapter 4. Invariance of Solution Concepts
represented in the Figure below.
3
A
B B
1, 0 1, 1 1, 2 2, 3
x y
a
b
a
b
Figure 4.2: The unique subgame is the game itself.
Denition 19. For all games G, dene A
Spe
() the set of Subgame perfect equilibrium
proles, that is
A
Spe
() =
_
s

iI
S
i
: i I, s
i
S
i
, K /, u
i
(s

i
[
K
, s

i
[
K
) u
i
(s
i
, s

i
[
K
)
_
.
In few words, it states that s

is a Subgame Perfect equilibrium if and only if it is a Nash


equilibrium in every subgame. It clearly renes the notion of Nash equilibrium. Indeed, in
the case of the game represented in Figure 4.1:
A
Spe
() = (y, a) (y, a), (x, b) = A
Nash
().
Nevertheless, there exist situations of games with imperfect information where selected
Subgame Perfect equilibrium may be unreasonable. Take for example for case of Figure
4.3. It can be easily checked that
A
Spe
() = A
Nash
() = (x, a), (z, b).
3
Notice that if a game G satises perfect recall (2.6) then the game itself is always a subgame.
4.1. Renements of equilibrium concepts 67
A
B B
2, 4
3, 3 0, 2 4, 3 1, 1
x
y z
a
b
a
b
Figure 4.3: A Subgame Perfect equilibrium which is not reasonable.
Again, the Subgame Perfect equilibrium (z, b) highlights the ineptitude of this concept to rule
out situations of erring players. One may conclude that the notion of subgame is too strict,
and a dierent equilibrium concept is needed. The most natural way is to assume that each
player has to guess what is the correct history (as ordered sequence of simultaneous moves
games) which brings him to be active, i.e. whenever he has to choose in some non-singleton
information set. Then, according to such guess, he will dene some probabilities measures on
the set of his available actions. This underlying idea was put forward by Kreps and Wilson
(1982) as the notion of Sequential equilibrium. Hence, the new equilibrium requires also
the specication of some system of beliefs, together with a prole of behavioral strategies:
Such pair has been dened assessment. The additional requirements to be an equilibrium
rely on the concept of consistency
4
and the sequential rationality of each player. It turns
out that the notion of Sequential equilibrium aims to regroup the ones of trembling hand
and subgame perfection. In particular, it implies that if it can be shown that the set of
Sequential equilibria is not preserved through some of the Thompsons transformations then
also the set of Subgame Perfect equilibria will not. The converse may be not true in general.
5
Lemma 26. The set of Subgame Perfect equilibria is preserved through Interchanging of
Simultaneous Moves transformation:
D
T
1
(G), A
Spe
() = A
Spe
(T
1
()) .
4
The term consistency can be considered misleading, as far as it asks for the existence of a sequence of
totally mixed assessments converging to the original one, such that the Bayes rule holds whenever possible.
5
Nevertheless, it can be shown that, according to the denition of Sequential equilibrium given in Kreps
and Wilson (1982), also the converse holds. Indeed the unique transformation under which the set of Subgame
Perfect equilibria is always preserved is the Interchange of Simultaneous Moves T
1
. The same holds for the
set of Sequential equilibria.
68 Chapter 4. Invariance of Solution Concepts
Proof. A prole of strategies s

S is a Subgame Perfect equilibrium whenever it is a Nash


equilibrium for all subgames K /. But the condition to be a subgame is the closeness
under the information set partitions, i.e. it cannot exists a information set which has histories
in the subgame and outside. Since T
1
does not change the structure of the information set
partitions (H
i
)
iI
(dierently from Coalescing Moves transformation), and everything else is
essentially kept xed, the proof concludes with the same argument of Lemma 24.
It will be shown now that T
1
is the unique transformation under which the set A
Spe
()
is preserved.
Lemma 27. The set of Subgame Perfect equilibrium is generally not preserved through
Coalescing Moves / Sequential Agent Splitting transformation:
D
T
2
(G), A
Spe
() ,= A
Spe
(T
2
()) .
Proof. It is enough to provide an example, which is shown in Figure 4.4.
A
A
B B
2, 1
0, 0 1, 2 0, 1 0, 2
x y
a
b
a
b
t z
=
A
B B
2, 1
0, 0 1, 2 0, 1 0, 2
x
y z
a
b
a
b
Figure 4.4: Coalescing Moves transformation does not preserve Subgame Perfect equilibria.
According to Denition 19, the set of Subgame Perfect equilibria is not invariant, indeed it
can be easily check that:
A
Spe
() = (z, b), (y, b) (z, a), (z, b), (y, b) = A
Spe
(T
2
()) .
In particular, recalling the construction of the transformation T
2
, it should be clear that also
4.1. Renements of equilibrium concepts 69
the following holds:
D
T
2
(G), A
Spe
() A
Spe
(T
2
()) .
Lemma 28. The set of Subgame Perfect equilibrium is generally not preserved through
Addition of Superuous transformation:
D
T
3
(G), A
Spe
() ,= A
Spe
(T
3
()) .
Proof. Again, it is enough to provide an example, which is shown in Figure 4.5.
A
1, 4
B
0, 2 2, 3
x y
a
b
=
A
B B
0, 2 2, 3 1, 4 1, 4
x y
a
b
a
b
Figure 4.5: Addition of Superuous Move does not preserve Subgame Perfect equilibria.
In a sense, the Addition of Superuous Moves transformation modies the structure of the
game so that it looks more similar to extensive form representation of its reduced normal
form. In particular, it means that the number of subgames shrinks, so that
D
T
3
(G), A
Spe
() A
Spe
(T
3
()) .
Moreover the inclusion can be strict. Indeed it is straightforward to check that in the above
example
A
Spe
() = (y, b) (x, a), (y, b) = A
Spe
(T
3
()) .
Lemma 29. The set of Subgame Perfect equilibrium is generally not preserved through
Ination / Deation:
D
T
4
(G), A
Spe
() ,= A
Spe
(T
4
()) .
70 Chapter 4. Invariance of Solution Concepts
Proof. Let us check the extensive form D
T
4
(G) represented in Figure 4.6.
A
B B
0, 2 2, 3 1, 4 1, 4
x y
a

=
A
B B
0, 2 2, 3 1, 4 1, 4
x y
a
b
a
b
Figure 4.6: Ination/Deation transformation does not preserve Subgame Perfect equilibria.
It can easily concluded that A
Spe
() = (y, a) (x, b), (y, a) = A
Spe
(T
4
()), and in
general
D
T
4
(G), A
Spe
() A
Spe
(T
4
()) .
Theorem 3. The set of invariant transformations which preserve always the set of Subgame
Perfect equilibria coincides with the set of compositions of Interchanging of Simultaneous
Moves and Deletion of Forced Moves:
T T: D
T
(G), A
Spe
() = A
Spe
(T ()) =
_
J,=
_

(
j
)
jJ
0,1
J T

j
_
.
Proof. In the same spirit of Theorems 1 and 2, the result provided by Thompson (1952) can
be extended in this theoretical framework by
T =
_
J,=
_
(
j
)
jJ
0,1,2,3,4
J
_

jJ
T

j
_
.
The transformation T
0
is clearly innocuous in any case.
6
On the one hand, according to
Lemma 26, the transformation T
0
preserves the set of Subgame Perfect equilibria, implying
6
As observed before, it is rather a technicality which can be avoided assuming [A
i,
[ 2 whenever
(i, ) /.
4.1. Renements of equilibrium concepts 71
that
_
J,=
_

(
j
)
jJ
0,1
J T

j
_
T T: D
T
(G), A
Spe
() = A
Spe
(T ()) .
Suppose that there exists an invariant transformation T =
(
j
)
jJ
0,1
J T

j
, for some non-
empty J, which belongs to the right hand side and such that
j

jJ
2, 3, 4 ,= . Then,
according to examples provided in Lemmas 27, 28 and 29, it can be shown that there exists
D
T
(G) such that A
Spe
() ,= A
Spe
(T ()).
4.1.2 Weak Perfect Bayesian Equilibrium
At this point, one may argue that all types of equilibrium are invariant to the Interchanging
of Simultaneous Moves transformation. It is wrong. One example is given by the so-called
7
Weak Sequential equilibrium proposed by Myerson (1991, Ch.5): it can be shown it is
invariant to Coalescing Moves transformation, but not to Interchanging to Simultaneous
Moves. Another example is given by the notion of Perfect Bayesian Equilibrium.
8
In the
denition given by Fudenberg and Tirole (1991), this equilibrium is not invariant with respect
to both transformations, Interchanging of Simultaneous Moves and Coalescing Moves. On
the one hand, since the Sequential equilibrium is a renement, it is not surprising that (all
variants of) Perfect Bayesian Equilibrium are not preserved through Coalescing Moves. On
the other hand, some years later Battigalli (1996a) proved that their notion of equilibrium
is not invariant also to the Interchanging of Simultaneous Moves transformation. Then, he
suggested a renement, which in turn is not equivalent to Sequential equilibrium, such that
the property of invariance with respect to T
1
holds. Let us replicate his example,
9
considering
the notion of Weak Perfect Bayesian Equilibrium proposed by Mas-Colell et al. (1995, p.285).
Denition 20. A prole of strategies and a system of beliefs (, ) is a Weak Perfect
Bayesian Equilibrium if:
1. The strategy prole is sequentially rational given the belief system ;
2. The system of beliefs is derived from the strategy prole through Bayes rule
7
Despite its name, it is not a renement of the Subgame Perfect equilibrium proposed by Selten (1965).
8
In literature there does not exist a unique denition of this equilibrium.
9
A similar example shows the drawback of non-invariance for other notions of this equilibrium, e.g. the
one provided by Bonanno (1992a).
72 Chapter 4. Invariance of Solution Concepts
whenever possibile, meaning that
h H H , Pr (H[) > 0 = (x) =
Pr (h[)
Pr (H[)
.
Figures 4.7 and 4.8 represent two equivalent extensive forms
10
with three players A, B
and C such that it begins with a simultaneous moves game between A and B. If B chooses
the action o the game ends (indeed, there are two terminal nodes associated with this action,
z
0
and z
13
, depending on the choice of A). Otherwise player C will have to choose between
a, b and c, under the assumption that he can observe the initial choice of A, but not the one
of B (or better, he can only infer that B did not choose the action o).
B
C C
z
4
z
6
z
5
z
1
z
2
z
3
x y
a c a c
b b
B
C C
z
10
z
12
z
11
z
7
z
8
z
9
x y
a c a c
b b
A
z
0
z
13

o o
Figure 4.7: T
1
does not preserve the set of Weak Perfect Bayesian equilibria.
The utilities associated with terminal nodes are u(z
0
) = (1, 1, 0) and u(z
13
) = (0, 0, 0) if B
chooses o. Otherwise, for all j 1, . . . , 6 let u(z
j
) = u(z
j+6
), and
j 1 2 3 4 5 6
u(z
j
) (0, 0, 3) (0, 0, 0) (0, 0, 2) (0, 0, 0) (0, 0, 3) (0, 0, 2)
10
It is understood that equivalent means that they share the same (reduced) normal form, hence without
considering the temporal order of moves: it will be the point of the example.
4.2. Rationalizability in extensive form games 73
B
A A A
z
0
z
13
C
z
7
z
8
z
9
a
b
c
C
z
10
z
11
z
12
a
b
c
C
z
1
z
2
z
3
a
b
c
C
z
4
z
5
z
6
a
b
c
x y o

Figure 4.8: T
1
transformation of the game in Figure 4.7.
On the one hand, it can be checked that the assessment (, ) where = (, o, (a if ; b if ))
is a Weak Perfect Bayesian equilibrium whenever the probability assigned by C at the
histories (, x) and (, y) are both not smaller than 2/3. In this way, the condition of
sequentially rational if veried for player C (there is nothing else to check, since A and B
play only once). On the other hand, such pair is not a Weak Perfect Bayesian equilibrium in
the transformed game of Figure 4.8: Interchanging of Simultaneous Moves does not preserve
the set of Weak Perfect Bayesian equilibria; at least, according to the denition given by
Mas-Colell et al. (1995).
4.2 Rationalizability in extensive form games
Since the extensive form representation is richer than its associated normal form in terms of
information, and the active players are allowed to update their subjective beliefs as the game
unfolds, the study of rationalizability becomes more complex than the one in simultaneous
moves game. Extensive form rationalizability, introduced by Pearce (1984), is a solution
concept which relies on the forward induction reasoning: it tries to grab the implications of
rationality and common certainty in rationality. It is dened, as in the case of simultaneous
moves games, as an algorithmic procedure of elimination of strategies. The underlying idea
74 Chapter 4. Invariance of Solution Concepts
is that each active player can make an argument about how he can best rationalize their
opponents behavior, and what can be deduced from this line of reasoning about what their
opponent will do. The assumption is that when a player knows that his opponents behaved
rationally, then (he believes) they will continue to act rationally in the future. Moreover,
if he observes that their opponents behavior can be rationalized assuming that each one of
them believed their opponents to behave rationally, he assumes that they will continue to do
also in the future. And so on.
Predicted outcomes are characterized epistemically by Battigalli and Siniscalchi (1999)
and Battigalli and Siniscalchi (2002) as those attained under rationality and common
strong belief in rationality: along each path of the game, at the rst occasion a player
has the occasion to play, he believes that his opponents will behave rationally, and that
their opponents believe their opponents to behave rationally, and so forth. This notion
incorporates a notion of best rationalization principle, in the sense that, in case of
unexpected situations, players will be so optimistic to assign to highest possible degree of
strategic sophistication to the other ones. In the opposite case, it is reasonable to assume
that they will not revise their beliefs.
Let us make an example: consider the extensive form game represented in Figure 4.9. In
this perfect-information game the action a
1
is strictly dominant for player A, and action c
1
is strictly dominant for player C.
A
(5, 0, 0)
B
(0, 1, 0)
C
(3, 0, 3) (4, 2, 2)
a
1
a
2
b
1
b
2
c
1
c
2
Figure 4.9: How can player B be justied to choose b
2
?
At the beginning of the game, player B assumes that his opponents are sequentially rational,
4.2. Rationalizability in extensive form games 75
or better:
i I, (j I i, i believes that j is sequentially rational) . (4.2)
Hence, he is expecting that the game will not unfold to his decision node. What happens in
the opposite case? He can only deduce that his assumption was not correct, meaning that
it is not true that every opponent (viewed as a group) is sequentially rational. In particular,
he infers that C can choose his strictly dominated action c
2
. In this sense, player B might
be justied to choose action b
2
. This is the line of reasoning underlying the Correlated
Extensive Form Rationalizability. The situation will be clearly dierent if the assumption
(4.2) is replaced with
i I, j I i, (i believes that j is sequentially rational) .
In other words, stochastic independence among players beliefs allows to narrow down the
set of possible outcomes. In particular, in the case B has to choose, the assumption about
the rationality of C is not violated. Under this constraint, the number of possible outcomes
shrinks to two. This example highlights the dierence between the notion of Weak Extensive
Form Rationalizability and the Correlated EFR; see also (Ben Porath, 1997), (Battigalli,
1996b) and (Battigalli, 1997). The insight is that, as pointed out by Stalnaker (1996), causal
independence does not entail epistemic independence.
Let us characterize these dierent notions of Extensive Form Rationalizability, with the
convention that a player strongly believes an event E if he assigns probability 1 to E on any
information set which is not inconsistent with the event itself. The Correlated Extensive
Form Rationalizability is based on the following axioms, for all players i I:
E
0
(i): j I, j is (weakly) sequentially rational.
n N, E
n+1
(i): j I, j strongly believes E
0
(i) . . . E
n
(i).
It is then assumed that each player assigns the highest possible degree of strategic
sophistication to the other ones viewed as the group of opponents. Then, it is implicit
that each player entertains the hypothesis that his opponents might be coordinating their
strategies. As the game unfolds, a player i may realize that the event E
n
(i) is not true; in
76 Chapter 4. Invariance of Solution Concepts
such case he will assign probability 1 to
E
0
(i) . . . E
n1
(i).
The notion of Weak Extensive Form Rationalizability
11
relies on the following ones:
W
0
(i): j I, j is (weakly) sequentially rational and has independent beliefs.
n N, W
n+1
(i): j I, j is certain of W
n
(i) at the beginning of the game.
In particular, i assigns to each of their opponents the smallest degree of strategic
sophistication among them: their opponents are viewed as a group.
The assumption of epistemic independence can be then complemented with an additional
restriction on belief revision, so that each player will assign the maximal degree of
sophistication to each one of his opponents. Hence, a further renement has been proposed,
called Strong Extensive Form Rationalizability. This last notion is based on the
following axioms, for all players i I:
j I, S
0,j
(i): j is (weakly) sequentially rational and has independent beliefs.
j I, n N, S
n+1
(i): k I j, j strongly believes S
0,k
(j) . . . S
n,k
(j).
At this point, one can simply realize that the set of prole of strategies which survive
the algorithmic procedure of eliminations is preserved through Interchanging of Simultaneous
Moves and Coalescing Moves transformations, with respect to each version of Extensive Form
Rationalizability. For all games G dene E
Corr
() the set of prole of strategies which
are selected from the Correlated Extensive Form Rationalizability, and similarly E
Weak
()
and E
Strong
(), so that
G, E
Strong
() E
Weak
() E
Corr
().
11
Weak Extensive Form Razionalizability is sometimes called Initial Extensive Form Rationalizability.
The reason should be clear from the denition of axioms W
1
(i), W
2
(i), . . ..
4.2. Rationalizability in extensive form games 77
Theorem 4. Interchanging of Simultaneous Moves and Coalescing Moves transformations
preserve the set of rationalizable proles in extensive games with imperfect information, i.e.
j 1, 2, D
T
j
(G), E
Corr
() = E
Corr
(T
j
()),
and similarly for E
Weak
() and E
Strong
().
Proof. The transformation T
1
essentially preserves the information sets partitions (H
i
)
iI
.
It implies that, as the transformed game unfolds, each player does not have a better
information structure than in the original game: the validity of axioms is preserved across this
transformation. In particular, a prole of strategy will be eliminated from the transformed
game T
1
() if and only if it will on the game as well.
B
C C
z
3
z
4
z
1
z
2
b
1
b
2
c
1
c
2
c
1
c
2
B
C C
z
7
z
8
z
5
z
6
b

1
b

2
c
1
c
2
c
1
c
2
A
a
1
a
2
=

A,C
B
B
z
2
z
4
z
1
z
3
b
1
b
2
b
1
b
2
B
B
z
6
z
8
z
5
z
7
b

1
b

2
b

1
b

2
a
1
.c
1
a
1
.c
2
a
2
.c
1
a
2
.c
2
Figure 4.10: Interchanging of Simultaneous Moves transformation.
78 Chapter 4. Invariance of Solution Concepts
Take as example the transformation represented in Figure 4.10. Player C is not able to
observe the action chosen by his opponents. Also, player B can observe the choice of A.
After the application of transformation T
1
player C is playing at the root of the tree, together
with A. It is clear from the Denition of this invariant transformation, given in Subsection
3.1.2, that B has always the same amount of available information as the game unfolds: he
can still observe only the action chosen by A.
The same argument cannot be used with the transformation T
2
: the structure of
information sets partitions (H
i
)
iI
is not preserved across the transformation. Nevertheless,
also in this case the information received by each player is essentially the same. Indeed,
according to the construction of this transformation, given in Subsection 3.1.3, the
information sets partitions are modied in a way that, if some actions of a player i are
moved up in the tree, his opponents (in particular, the ones active in the middle part of the
tree) can infer nothing more and nothing less after this transformation.
A
B
A A
z
5
z
3
z
4
z
1
z
2
a
b
x y x y
w z
=
A
B B
z
5
z
2
z
4
z
1
z
3
x
y z
a
b
a
b
Figure 4.11: Coalescing Moves transformation.
Take as example the transformation represented in Figure 4.11. In the transformed game,
player A has a bigger set of available actions. Clearly, for A both games represent essentially
the same situation, as far in both case he will observe nothing about his opponent. Moreover,
in the original game player B is able to distinguish only between z and w (or better, if the
game unfolds up to his decision node then he can infer that action z has not been chosen by
A). In the transformed game, if the game unfolds up to one of his decision nodes, he will
deduce only that z has not been chosen. As it was expected, the information structure is
essentially preserved through the transformation.
CHAPTER 5
Closing Remarks
In game theory, there is place for many notions of equivalence. From this perspective, the
four transformations provided by Thompson (1952) can be considered the starting point of
the development of many other equivalence relations. Although the focus is still related
to the descriptive component of the rules of the game, the theoretical framework that has
been analyzed here does not need the specication of the consequence function. It has
been shown that (the compositions of) only two of those transformations are sucient to
completely characterize the behavioral equivalence dened by having essentially the same
normal forms, in the sense that it happens if and only if one can be transformed into each
other by some applications of Interchanging of Simultaneous Moves and Coalescing Moves
/ Sequential Agent Splitting. It is remarkable that each transformation preserves perfect
recall, and so their compositions. Here, the results hold in a theoretical framework which
is more general than the set-theoretic extensive form dened by Bonanno (1992b): each
proof does not rely on the niteness of sets. Moreover, it is suggested a natural way to extend
the results provided by Kohlberg and Mertens (1986) for the model with chance moves.
Then, various solution concepts have been surveyed to evaluate which ones are preserved
under these transformations, and which ones not: the original Thompsons characterization
shows that the reduced normal form is the most natural notion of game equivalence.
80 Chapter 5. Closing Remarks
Nevertheless, many known solution concepts are not invariant under these transformations:
one may argue that this stable characterization can be used to provide a sort of goodness
for solution concepts. For the purpose, one could use a kind of weighted measure over the
types of transformations, where the invariance with respect to Interchanging of Simultaneous
Moves and Coalescing Move should be considered at least as important as the other two ones,
according to the results of this work. The answer is negative: it depends only on the strategic
features one wants to preserve across transformations.
Many natural questions related to this theme arise, and perhaps it can be interesting to
nd them an answer. Some examples: Does a similar result hold for extensive form games
with perfect recall, which are constructed on a tree structure such that
(V, _) V V
std
?
In this case the minimal extensive form representation is still uniquely well-dened.
1
But
how to construct a injective map from the set of (some variant of) normal forms to the one
of minimal extensive forms? In case of negative answer, how to construct a counterexample?
In addition: Is it possible to organize to notions of equivalence into a kind of hierarchy,
according to increasingly strict transformations which preserve the game structures?
At this point, one may ask what is the additional value to a well-dened notion of
quotient space with respect to some equivalence relation by the explicit specication of
all transformations under which it remains invariant. On the one hand, the rst answer
could be precision. Transformations on extensive games can give us insight into the nature
of strategic structure, to make explicit the logical equivalence of transformation rules. On
the other hand, another answer could be transparency. For example, topological structure
remains invariant under arbitrary stretching of the plane, rotations, and translations. In
geometry, similarity is invariant under dilations, translations and rotations; congruence is
invariant to all of them, except the former. These various equivalence relations become more
transparent stated in terms of permissible transformations, making in some sense explicit the
meaning of the quotient space and allowing a deeper understanding of game equivalences.
1
Indeed the proof of Lemma 20 does not make use the assumption (V, _) V
std
.
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