What are the main assumptions of rationality in game theory?

What are the main assumptions of rationality in game theory?

The main assumptions of rationality in game theory are as follows:

1. Consistency: Rational individuals have well-defined preferences and make choices that are consistent with those preferences. This means that if an individual prefers option A over option B, they will always choose A when given the choice between the two.

2. Transitivity: Rational individuals have transitive preferences, meaning that if they prefer option A over option B, and option B over option C, then they also prefer option A over option C.

3. Independence of Irrelevant Alternatives: Rational individuals' preferences should not be affected by the introduction of irrelevant alternatives. This means that the addition or removal of an option that is not chosen should not change the individual's preference between the remaining options.

4. Maximization: Rational individuals aim to maximize their own utility or payoff. They make choices that they believe will lead to the best possible outcome for themselves, given their preferences and the available options.

5. Perfect Information: Rational individuals have complete and accurate information about the game, including the available strategies, payoffs, and the actions of other players.

These assumptions provide a foundation for analyzing strategic interactions and predicting the behavior of rational individuals in game theory.