The Maxim Criterion and Randomised Behaviour Reconsidered

Matthew Ryan

No 166, Working Papers from Department of Economics, The University of Auckland

Abstract: Mixed strategy equilibria are often regarded as unconvincing behavioral predictions (eg. Stahl (1988)). Furthermore, while many games possess mixed equilibria, explicit randomization is rare in practice. We argue that both problems arise because conventional game theory excludes maximin behavior. By considering a generalization of Nash equilibrium, we prove that there exist plausible equilibria for 2 x 2 games which involve randomized choice. Interestingly, the randomizing player always adopts a maximin strategy. Maximin behavior is therefore crucial to explaining randomization. We also prove that games with randomized equilibria are non-generic, hence unlikely to be observed in practice.

Keywords: Maximum criterion; Economics (search for similar items in EconPapers)
Date: 1999
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/2292/166

Related works:
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:auc:wpaper:166

Access Statistics for this paper

More papers in Working Papers from Department of Economics, The University of Auckland Contact information at EDIRC.
Bibliographic data for series maintained by Library Digital Development (digital.development@auckland.ac.nz).