  For some well-known games, such as the Traveler's Dilemma or the Centipede
Game, traditional game-theoretic solution concepts--and most notably Nash
equilibrium--predict outcomes that are not consistent with empirical
observations. In this paper, we introduce a new solution concept, iterated
regret minimization, which exhibits the same qualitative behavior as that
observed in experiments in many games of interest, including Traveler's
Dilemma, the Centipede Game, Nash bargaining, and Bertrand competition. As the
name suggests, iterated regret minimization involves the iterated deletion of
strategies that do not minimize regret.
