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Valuation Equilibria

Philippe Jehiel () and Dov Samet ()

Game Theory and Information from University Library of Munich, Germany

Abstract: We introduce a new solution concept for games in extensive form with perfect information: the valuation equilibrium. The moves of each player are partitioned into similarity classes. A valuation of the player is a real valued function on the set of her similarity classes. At each node a player chooses a move that belongs to a class with maximum valuation. The valuation of each player is \emph{consistent} with the strategy profile in the sense that the valuation of a similarity class is the player 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. An aspiration-based approach is also proposed, in which the similarity partitions are determined endogenously. The corresponding equilibrium is called the aspiration-based valuation equilibrium (ASVE). While the Subgame Perfect Nash Equilibrium is always an ASVE, there are other ASVE in general. But, in zero-sum two-player games without chance moves every player must get her value in any ASVE.

Keywords: bounded rationality; valuation; similarity; aspiration. (search for similar items in EconPapers)
JEL-codes: C72 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2003-10-08
Note: Type of Document - ; pages: 18
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Related works:
Journal Article: Valuation equilibrium (2007) Downloads
Working Paper: Valuation Equilibrium (2007)
Working Paper: Valuation Equilibria (2006) Downloads
Working Paper: Valuation Equilibria (2003) Downloads
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