A Behavioral Test and Classification of Solution Concepts in Games

Alphonse Fodouop Fotso, Roland Pongou () and Bertrand Tchantcho
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Alphonse Fodouop Fotso: University of Maroua, Faculty of Sciences, Department of Mathematics and Computer sciences
Roland Pongou: University of Ottawa
Bertrand Tchantcho: University of Yaounde I

SN Operations Research Forum, 2024, vol. 5, issue 4, 1-35

Abstract: Abstract We formalize three leading rationality approaches in a general game environment: rational optimism, conservatism, and prudence (or maximin rationality). This formalization leads to the formulation of a behavioral test of rationality in static and dynamic games. We then test 12 important concepts of myopic and farsighted rationality for such games, comprising the von Neumann-Morgenstern stable sets, the Nash equilibrium, the core, the Harsanyi’s stable sets, and their most prominent descendants. While most of these solution concepts are either rationally optimistic or conservative, all fail the prudence test. We find that the prudence criterion addresses a lack of maximality and anticipation in both the rationally optimistic and the conservative approaches and is therefore more demanding.

Keywords: Solution concepts; Rational optimism; Conservatism; Prudence; One-shot/dynamic games; Limited rationality (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s43069-024-00375-z

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