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Assessing Strategic Risk

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  • R.J., AUMANN
  • Jacques-Henri, DREZE

Abstract

In recent decades, the concept of subjective probability has been increasingly applied to an adversary’s choices in strategic games. A careful examination reveals that the standard construction of subjective probabilities does not apply in this context. We show how the difficulty may be overcome by means of a different construction, and provide an axiomatic fondation for it.

Suggested Citation

  • R.J., AUMANN & Jacques-Henri, DREZE, 2005. "Assessing Strategic Risk," Discussion Papers (ECON - Département des Sciences Economiques) 2005020, Université catholique de Louvain, Département des Sciences Economiques.
  • Handle: RePEc:ctl:louvec:2005020
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    References listed on IDEAS

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    Cited by:

    1. Frank Heinemann & Rosemarie Nagel & Peter Ockenfels, 2009. "Measuring Strategic Uncertainty in Coordination Games," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 181-221.
    2. Jacques Dreze, 2012. "Nested identification of subjective probabilities," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(1), pages 259-271, March.
    3. Grant, Simon & Meneghel, Idione & Tourky, Rabee, 2013. "Savage Games: A Theory of Strategic Interaction with Purely Subjective Uncertainty," Risk and Sustainable Management Group Working Papers 151501, University of Queensland, School of Economics.
    4. Charles S. Tapiero, 2006. "Book Review: "A Game Theory of Analysis of Options: Corporate Finance and Financial Intermediation in Continuous Time", Alexandre Ziegler," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 8(03), pages 521-523.
    5. Guilhem Lecouteux, 2018. "Bayesian game theorists and non-Bayesian players," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 25(6), pages 1420-1454, November.
    6. Lauren Larrouy & Guilhem Lecouteux, 2018. "Choosing in a Large World: The Role of Focal Points as a Mindshaping Device," Working Papers halshs-01923244, HAL.
    7. Swee-Hoon Chuah & Robert Hoffmann & Jeremy Larner, 2011. "Escalation Bargaining: Theoretical Analysis and Experimental Test," ICBBR Working Papers 16, International Centre for Behavioural Business Research.
    8. Guilhem Lecouteux, 2018. "What does “we” want? Team Reasoning, Game Theory, and Unselfish Behaviours," Revue d'économie politique, Dalloz, vol. 128(3), pages 311-332.
    9. Lehrer, Ehud & Teper, Roee, 2011. "Justifiable preferences," Journal of Economic Theory, Elsevier, vol. 146(2), pages 762-774, March.
    10. Ullberg, Eskil, 2015. "Trade in Ideas: Performance and Behavioural Properties of Markets in Patents with Two-part Tariff," Ratio Working Papers 261, The Ratio Institute.
    11. Swee-Hoon Chuah & Robert Hoffmann & Jeremy Larner, 2011. "Escalation Bargaining: Theoretical Analysis and Experimental Test," Discussion Papers 2011-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    12. Grant, Simon & Meneghel, Idione & Tourky, Rabee, 2016. "Savage games," Theoretical Economics, Econometric Society, vol. 11(2), May.
    13. Li, Chen & Turmunkh, Uyanga & Wakker, Peter P., 2020. "Social and strategic ambiguity versus betrayal aversion," Games and Economic Behavior, Elsevier, vol. 123(C), pages 272-287.
    14. Dekel, Eddie & Siniscalchi, Marciano, 2015. "Epistemic Game Theory," Handbook of Game Theory with Economic Applications,, Elsevier.

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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