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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 3, Number 3 (September 2008) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/16625

Title: Subjective expected utility in games
Authors: Alfredo Di Tillio; Department of Economics and IGIER, Universitàocconi
Keywords: Subjective probability, preference hierarchies, type spaces, beliefs hierarchies, common belief, expected utility, incomplete information, correlated equilibria
C70, D80, D81, D82, D83
Issue Date: 1-Sep-2008
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 3, No 3 (2008)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] This paper extends Savage's subjective approach to probability and utility from decision problems under exogenous uncertainty to choice in strategic environments. Interactive uncertainty is modeled both explicitly, using hierarchies of preference relations, the analogue of beliefs hierarchies, and implicitly, using preference structures, the analogue of type spaces a la Harsanyi, and it is shown that the two approaches are equivalent. Preference structures can be seen as those sets of hierarchies arising when certain restrictions on preferences, along with the players' common certainty of the restrictions, are imposed. Preferences are a priori assumed to satisfy only very mild properties (reflexivity, transitivity, and monotone continuity). Thus, the results provide a framework for the analysis of behavior in games under essentially any axiomatic structure. An explicit characterization is given for Savage's axioms, and it is shown that a hierarchy of relatively simple preference relations uniquely identifies the decision maker's utilities and beliefs of all orders. Connections with the literature on beliefs hierarchies and correlated equilibria are discussed.
URI: http://hdl.handle.net/1807/16625
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20080287
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 3, Number 3 (September 2008)

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