Risk Dominance

Risk dominance is a refinement criterion in game theory used to select among multiple Nash equilibria when no equilibrium Pareto dominates the others. Introduced by John Harsanyi and Reinhard Selten in their 1988 work A General Theory of Equilibrium Selection in Games, the concept addresses a fundamental problem: when rational agents face multiple equilibria, which one should they coordinate on?

Definition and Logic

In a two-player coordination game with two pure-strategy equilibria, risk dominance compares the product of the deviation