The Equilibrium Concept in Game Theory

Elon Kohlberg is studying the foundations of the equilibrium concept in game theory, which is to the study of economic systems what the notion of "equilibrium of forces" is to the study of mechanical systems. Although much of economic theory can be viewed in terms of this concept's application to particular cases (e.g., competition between firms), game theoretic equilibrium rests on rather shakier foundations than its analogue in the physical sciences. In particular, it is not clear why one should expect a system to gravitate towards equilibrium. Kohlberg (with Philip Reny of the University of Western Ontario) is attempting to clarify the foundations of a particular type of equilibrium known as 'perfect equilibrium' and (with John Hillas of the University of Auckland in New Zealand) to extend these ideas to the notion of equilibrium itself.