Bluffing as a Mixed Strategy
AbstractIn von Neumann and Morgenstern's sample model of poker, equilibrium has the first player bet with high and low hands, and check with intermediate hands.� The second player then calls if his hand is sufficiently high.� Betting by the low hands is interpreted as bluffing, and is a pure strategy.� Here we show that this equilibrium is nongeneric, in the sense that it ceases to exist if the first player is allowed to choose among many possible bets, rather than just one.� Moreover, Newman's solution for this case - which also has pure-strategy bluffing - is shown not to be a sequential equilibrium.� However, a modified solution� - where low hands bluff using mixed strategies - is a sequential equilbrium.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 590.
Date of creation: 01 Jan 2012
Date of revision:
Poker; Game theory; Mixed strategies; Perfect Bayesian equilibrium; Sequential equilibrium;
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-01 (All new papers)
- NEP-GTH-2012-02-01 (Game Theory)
- NEP-HPE-2012-02-01 (History & Philosophy of Economics)
- NEP-MIC-2012-02-01 (Microeconomics)
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- Dreef, M.R.M. & Borm, P.E.M. & Genugten, B.B. van der, 2002. "On Strategy and Relative Skill in Poker," Discussion Paper, Tilburg University, Center for Economic Research 2002-59, Tilburg University, Center for Economic Research.
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