Strategic games beyond expected utility
- 259 Downloads
This paper argues that Nash equilibrium is a solution where all strategic uncertainty has been resolved and, therefore, inappropriate to model situations that involve “ambiguity.” Instead, to capture what players will do in the presence of some strategic uncertainty, takes a solution concept that is closed under best replies. It is shown that such a solution concept, fixed sets under the best reply correspondence, exists for a class of games significantly wider than those games for which generalizations of Nash equilibrium exist. In particular, this solution can do without the expected utility hypothesis.
KeywordsAmbiguity Fixed sets under the best reply correspondence Nash equilibrium Non-expected utility
JEL ClassificationC6 C72 C79 D81
Unable to display preview. Download preview PDF.
- Aliprantis C.D., Border K.C.: Infinite Dimensional Analysis (3rd edn.; 1st edn. 1999). Springer, Berlin (2006)Google Scholar
- Aumann R.J.: Mixed and behavior strategies in infinite extensive games. In: Dresher, M., Shapley, L.S., Tucker, A.W. (eds) Advances in Game Theory, Annals of Mathematics Study 52, pp. 627–650. Princeton University Press, Princeton (1964)Google Scholar
- Berge C.: Topological Spaces. Oliver & Boyd, Edinburgh and London (1963)Google Scholar
- Eichberger J., Kelsey D.: Optimism and Pessimism in Games. Unpublished manuscript, University of Heidelberg (2009)Google Scholar
- Eichberger, J., Kelsey, D.: Are the Treasures of Game Theory Ambiguous? University of Heidelberg: Unpublished manuscript (2010)Google Scholar
- Harsanyi, J.C.: Games of incomplete information played by Bayesian players. I, II, and III. Manag Sci 14, 159–182, 320–334, 486–502 (1967–1968)Google Scholar
- Kuhn H.W.: Extensive games and the problem of information. In: Kuhn, H.W., Tucker, A.W. (eds) Contributions to the Theory of Games, vol. II, pp. 193–216. Princeton University Press, Princeton (1953)Google Scholar
- von Neumann J., Morgenstern O.: Theory of Games and Economic Behavior, (3rd edn.; 1st edn. 1944). Princeton University Press, Princeton (1953)Google Scholar