LEXICOGRAPHIC ADDITIVITY FOR MULTI-ATTRIBUTE PREFERENCES ON FINITE SETS |
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Authors: | Nakamura Yutaka |
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Institution: | (1) Department of Psychology, University of Leicester, Leicester, LE1 7RH, U.K |
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Abstract: | Payoff dominance, a criterion for choosing between equilibrium points in games, is intuitively compelling, especially in matching games and other games of common interests, but it has not been justified from standard game-theoretic rationality assumptions. A psychological explanation of it is offered in terms of a form of reasoning that we call the Stackelberg heuristic in which players assume that their strategic thinking will be anticipated by their co-player(s). Two-person games are called Stackelberg-soluble if the players' strategies that maximize against their co-players' best replies intersect in a Nash equilibrium. Proofs are given that every game of common interests is Stackelberg-soluble, that a Stackelberg solution is always a payoff-dominant outcome, and that in every game with multiple Nash equilibria a Stackelberg solution is a payoff-dominant equilibrium point. It is argued that the Stackelberg heuristic may be justified by evidentialist reasoning. |
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Keywords: | Coordination games evidentialism games of common interests payoff dominance simulation heuristic Stackelberg heuristic |
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