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Journal of Industrial Organization Education

Open Access
Online
ISSN
1935-5041
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The Intuitive and Divinity Criterion: Interpretation and Step-by-Step Examples

Felix Munoz-Garcia / Ana Espinola-Arredondo
Published Online: 2011-03-21 | DOI: https://doi.org/10.2202/1935-5041.1024

The paper presents an intuitive explanation of the Cho and Kreps’ (1987) Intuitive Criterion, and the Banks and Sobel’s (1987) Divinity Criterion (also referred as D1-Criterion). We provide multiple examples in which students can understand, step-by-step, the two main phases involved in these refinement criteria. Furthermore, we present economic settings in which the Cho and Kreps’ (1987) Intuitive Criterion does not restrict the set of equilibria, while the Banks and Sobel’s (1987) Divinity Criterion help refine the set of admissible separating equilibria in signaling games.

Keywords: signaling games; refinement criteria; intuitive criterion; divinity criterion

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Published Online: 2011-03-21


Citation Information: Journal of Industrial Organization Education, ISSN (Online) 1935-5041, DOI: https://doi.org/10.2202/1935-5041.1024.

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©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston. Copyright Clearance Center

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