Valuation Equilibrium

Abstract : We introduce a new solution concept for games in extensive form with perfect information, valuation equilibrium, which is based on a partition of each player's moves into similarity classes. A valuation of a player is a real-valued function on the set of her similarity classes. In this equilibrium each player's strategy is optimal in the sense that at each of her nodes, a player chooses a move that belongs to a class with maximum valuation. The valuation of each player is consistent with the strategy profile in the sense that the valuation of a similarity class is the player's expected payoff, given that the path (induced by the strategy profile) intersects the similarity class. The solution concept is applied to decision problems and multi-player extensive form games. It is contrasted with existing solution concepts. The valuation approach is next applied to stopping games, in which non-terminal moves form a single similarity class, and we note that the behaviors obtained echo some biases observed experimentally. Finally, we tentatively suggest a way of endogenizing the similarity partitions in which moves are categorized according to how well they perform relative to the expected equilibrium value, interpreted as the aspiration level.
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Article dans une revue
Theoretical Economics, Econometric Society, 2007, 2 (2), pp.163-185
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Contributeur : Caroline Bauer <>
Soumis le : mardi 20 novembre 2012 - 08:49:42
Dernière modification le : jeudi 11 janvier 2018 - 06:19:17

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  • HAL Id : halshs-00754229, version 1

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Philippe Jehiel, Dov Samet. Valuation Equilibrium. Theoretical Economics, Econometric Society, 2007, 2 (2), pp.163-185. 〈halshs-00754229〉

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