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The reasoning-based expected utility procedure

Author

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  • Robin P. Cubitt

    (University of Nottingham)

  • Robert Sugden

    (University of East Anglia)

Abstract

This paper presents a new iterative procedure for solving finite noncooperative games, the reasoning-based expected utility procedure (RBEU), and compares this with existing iterative procedures. RBEU deletes more strategies than iterated deletion of strictly dominated strategies, while avoiding the conceptual problems associated with iterated deletion of weakly dominated strategies. It uses a sequence of "accumulation" and "deletion" operations to categorise strategies as permissible and impermissible; strategies may remain uncategorised when the procedure halts. RBEU and related "categorisation procedures" can be interpreted as tracking successive steps in players' own reasoning.

Suggested Citation

  • Robin P. Cubitt & Robert Sugden, 2010. "The reasoning-based expected utility procedure," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 09-04, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:wcbess:09-04
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    File URL: https://www.uea.ac.uk/documents/166500/14307614/CBESS-09-04.pdf/cdeb92e5-8064-47a6-86c0-d7c6bbb91a73
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    References listed on IDEAS

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    1. Robin P. Cubitt & Robert Sugden, 2008. "Common reasoning in games," Discussion Papers 2008-01, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    2. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, January.
    3. Martin Dufwenberg & Mark Stegeman, 2002. "Existence and Uniqueness of Maximal Reductions Under Iterated Strict Dominance," Econometrica, Econometric Society, vol. 70(5), pages 2007-2023, September.
    4. Dekel, Eddie & Fudenberg, Drew, 1990. "Rational behavior with payoff uncertainty," Journal of Economic Theory, Elsevier, vol. 52(2), pages 243-267, December.
    5. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January.
    6. Asheim, Geir B. & Dufwenberg, Martin, 2003. "Admissibility and common belief," Games and Economic Behavior, Elsevier, vol. 42(2), pages 208-234, February.
    7. Cubitt, Robin P. & Sugden, Robert, 2003. "Common Knowledge, Salience And Convention: A Reconstruction Of David Lewis' Game Theory," Economics and Philosophy, Cambridge University Press, vol. 19(02), pages 175-210, October.
    8. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
    9. Chen, Yi-Chun & Long, Ngo Van & Luo, Xiao, 2007. "Iterated strict dominance in general games," Games and Economic Behavior, Elsevier, vol. 61(2), pages 299-315, November.
    10. Adam Brandenburger & Amanda Friedenberg & H. Jerome Keisler, 2014. "Admissibility in Games," World Scientific Book Chapters,in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 7, pages 161-212 World Scientific Publishing Co. Pte. Ltd..
    11. Samuelson, Larry, 1992. "Dominated strategies and common knowledge," Games and Economic Behavior, Elsevier, vol. 4(2), pages 284-313, April.
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    Cited by:

    1. Cubitt, Robin P. & Sugden, Robert, 2014. "Common Reasoning In Games: A Lewisian Analysis Of Common Knowledge Of Rationality," Economics and Philosophy, Cambridge University Press, vol. 30(03), pages 285-329, November.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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