Social Capital and Social Quilts: Network Patterns of Favor Exchange

We prove that for any equilibrium of a (Bayesian) game, and any sequence of perturbations of that game, there exists a corresponding sequence of ex-ante ε-equilibria converging to the given equilibrium of the original game. We strengthen the conclusion to show that the approaching equilibria are interim ε-equilibria (ε-best responses for almost all types) if beliefs in the perturbed games converge in a strong-enough sense to the limit beliefs. Therefore, equilibrium selection arguments that are based on perturbations to a game are not robust to slight perturbations in best reply behavior (or to underlying preferences). This applies to many standard equilibrium selections, including Seltenʼs ( 1975) definition of trembling-hand perfect equilibrium, Rubinsteinʼs ( 1989) analysis of the electronic mail game, and Carlsson and van Dammeʼs ( 1993) global games analysis, among others.