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.
Type de document :
Article dans une revue
Theoretical Economics, Econometric Society, 2007, 2 (2), pp.163-185
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Soumis le : mardi 20 novembre 2012 - 08:49:42
Dernière modification le : jeudi 11 janvier 2018 - 06:19:17


  • HAL Id : halshs-00754229, version 1



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



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