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Subjective Probability and the Theory of Games

Author

Listed:
  • Joseph B. Kadane

    (Carnegie-Mellon University)

  • Patrick D. Larkey

    (Carnegie-Mellon University)

Abstract

This paper explores some of the consequences of adopting a modern subjective view of probability for game theory. The consequences are substantial. The subjective view of probability clarifies the important distinction between normative and positive theorizing about behavior in games, a distinction that is often lost in the search for "solution concepts" which largely characterizes game theory since the work of von Neumann and Morgenstern. Many of the distinctions that appear important in conventional game theory (two-person versus n-person, zero-sum versus variable sum) appear unimportant in the subjective formulation. Other distinctions, such as single play versus repetitive-play games, appear to be more important in the subjective formulation than in the conventional formulation.

Suggested Citation

  • Joseph B. Kadane & Patrick D. Larkey, 1982. "Subjective Probability and the Theory of Games," Management Science, INFORMS, vol. 28(2), pages 113-120, February.
  • Handle: RePEc:inm:ormnsc:v:28:y:1982:i:2:p:113-120
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    File URL: http://dx.doi.org/10.1287/mnsc.28.2.113
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    Citations

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    Cited by:

    1. Ma, Chenghu, 2000. "Uncertainty aversion and rationality in games of perfect information," Journal of Economic Dynamics and Control, Elsevier, vol. 24(3), pages 451-482, March.
    2. Di Tillio, Alfredo, 2008. "Subjective expected utility in games," Theoretical Economics, Econometric Society, vol. 3(3), September.
    3. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275, Cowles Foundation for Research in Economics, Yale University.
    4. Rode, Julian, 2010. "Truth and trust in communication: Experiments on the effect of a competitive context," Games and Economic Behavior, Elsevier, vol. 68(1), pages 325-338, January.
    5. Rode, Julian, 2007. "Truth and Trust in Communication: An Experimental Study of Behavior under Asymmetric Information," Ratio Working Papers 111, The Ratio Institute.
    6. R. J. Aumann & J. H. Dreze, 2009. "Assessing Strategic Risk," American Economic Journal: Microeconomics, American Economic Association, vol. 1(1), pages 1-16, February.
    7. Velu, C. & Iyer, S., 2008. "The Rationality of Irrationality for Managers: Returns- Based Beliefs and the Traveller’s Dilemma," Cambridge Working Papers in Economics 0826, Faculty of Economics, University of Cambridge.
    8. Julia Mortera & Paola Vicard & Cecilia Vergari, 2012. "Object-Oriented Bayesian Networks for a Decision Support System," Departmental Working Papers of Economics - University 'Roma Tre' 0144, Department of Economics - University Roma Tre.
    9. Rode, Julian, 2008. "Truth and trust in communication : experiments on the effect of a competitive context," Papers 08-04, Sonderforschungsbreich 504.
    10. Guilhem Lecouteux, 2017. "Bayesian Game Theorists and Non-Bayesian Players," GREDEG Working Papers 2017-30, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    11. Teng, Jimmy, 2011. "Bayesian equilibrium by iterative conjectures: a theory of games with players forming conjectures iteratively starting with first order uninformative conjectures," MPRA Paper 37969, University Library of Munich, Germany, revised 06 Apr 2012.
    12. Colin Camerer & Teck-Hua Ho & Juin Kuan Chong, 2003. "A cognitive hierarchy theory of one-shot games: Some preliminary results," Levine's Bibliography 506439000000000495, UCLA Department of Economics.
    13. Lauren Larrouy & Guilhem Lecouteux, 2017. "Mindreading and Endogenous Beliefs in Games," Working Papers halshs-01469136, HAL.
    14. Robert Nau, 2001. "De Finetti was Right: Probability Does Not Exist," Theory and Decision, Springer, vol. 51(2), pages 89-124, December.
    15. Vitaly Pruzhansky, 2004. "A Discussion of Maximin," Tinbergen Institute Discussion Papers 04-028/1, Tinbergen Institute.
    16. R.J., AUMANN & Jacques-Henri, DREZE, 2005. "When All is Said and Done, How Should You Play and What Should You Expect ?," Discussion Papers (ECON - Département des Sciences Economiques) 2005021, Université catholique de Louvain, Département des Sciences Economiques.
    17. Guilhem Lecouteux, 2017. "Bayesian Game Theorists and non-Bayesian Players," Working Papers halshs-01633126, HAL.
    18. D.J. Johnstone, 2015. "Information and the Cost of Capital in a Mean-Variance Efficient Market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(1-2), pages 79-100, January.
    19. James E. Smith & Detlof von Winterfeldt, 2004. "Anniversary Article: Decision Analysis in Management Science," Management Science, INFORMS, vol. 50(5), pages 561-574, May.
    20. Xiao Luo, 2016. "Rational beliefs in rationalizability," Theory and Decision, Springer, vol. 81(2), pages 189-198, August.

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