A Decision Analysis Approach to Solving the Signaling Game

Barry R. Cobb () and Atin Basuchoudhary
Additional contact information
Barry R. Cobb: Department of Economics and Business, Virginia Military Institute, Lexington, Virginia 24450

Decision Analysis, 2009, vol. 6, issue 4, 239-255

Abstract: Decision analysis has traditionally been applied to choices under uncertainty involving a single decision maker. Game theory has been applied to solving games of strategic interaction between two or more players. Building upon recent work of van Binsbergen and Marx (van Binsbergen, J. H., L. M. Marx. 2007. Exploring relations between decision analysis and game theory. Decision Anal . 4 (1) 32--40), this paper defines a modified decision-theoretic approach to solving games of strategic interaction between two players. Using this method, the choices of the two players are modeled with separate decision trees comprised entirely of chance nodes. Optimal policies are reflected in the probabilities in the decision trees of each player. In many cases, the Nash equilibrium strategy for each player can be obtained by rolling back the opponent's decision tree. Results are demonstrated for the multistage signaling game, which is difficult to model using decision nodes to represent strategies, as in the approach of van Binsbergen and Marx.

Keywords: decision analysis; decision tree; game theory; mixed strategy; Nash equilibrium; signaling game (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://dx.doi.org/10.1287/deca.1090.0148 (application/pdf)

Related works:
Working Paper: A Decision Analysis Approach To Solving the Signaling Game (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ordeca:v:6:y:2009:i:4:p:239-255

Access Statistics for this article

More articles in Decision Analysis from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().