Aristotle's fallacy: A hypergame in the oil shipping business …

In this paper, an attempt is made to illustrate and validate some predictions of the ‘hypergame’ model of decision-making, a generalisation of the conventional game model as first described by von Neumann and Morgenstern. The hypergame concept, which can take players' differing perceptions, misperceptions and information conditions into account, is formally defined and two simple criteria of stability and choice are given. The core of the article consists of a case study involving decision-making under misperceptions. One result of the analysis is to show that decisions which at first sight appear ‘stupid’ and remain ‘irrational’ in a conventional game model, are indeed ‘rational’ if the players' perceptual limitations and their differing information conditions are considered. The conclusion is that the hypergame can be a useful extension of the traditional theory of games, and as such is one step on the way toward conceptually more complex and ‘realistic’ model building.