Stochastic dominance equilibria in two-person noncooperative games
AbstractTwo-person noncooperative games with finitely many pure strategies and ordinal preferences over pure outcomes are considered, in which probability distributions resulting from mixed strategies are evaluated according to t-degree stochastic dominance. A t-best reply is a strategy that induces a t-degree stochastically undominated distribution, and a t-equilibrium is a pair of t-best replies. The paper provides a characterization and existence proofs of t-equilibria in terms of representing utility functions, and shows that for t becoming large-which can be interpreted as the players becoming more risk averse-behavior converges to a specific form of max-min play. More precisely, this means that in the limit each player puts all weight on a strategy that maximizes the worst outcome for the opponent, within the supports of the strategies in the limiting sequenceof t-equilibria.
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Bibliographic InfoArticle provided by Springer in its journal International Journal of Game Theory.
Volume (Year): 34 (2006)
Issue (Month): 4 (November)
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Web page: http://link.springer.de/link/service/journals/00182/index.htm
Other versions of this item:
- Perea,Andres & Peters,Hans & Schulteis,Tim & Vermeulen,Dries, 2005. "Stochastic dominance equilibria in two-person noncooperative games," Research Memorandum 004, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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- Fishburn, Peter C., 1976. "Continua of stochastic dominance relations for bounded probability distributions," Journal of Mathematical Economics, Elsevier, vol. 3(3), pages 295-311, December.
- Jacques Durieu & Hans Haller & Nicolas Quérou & Philippe Solal, 2007.
- Peters, Hans & Schulteis, Tim & Vermeulen, Dries, 2007.
"Generalized stochastic dominance and bad outcome aversion,"
031, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
- Hans Peters & Tim Schulteis & Dries Vermeulen, 2010. "Generalized stochastic dominance and bad outcome aversion," Social Choice and Welfare, Springer, vol. 35(2), pages 285-290, July.
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