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Utility proportional beliefs

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  • Christian Bach
  • Andrés Perea

Abstract

In game theory, basic solution concepts often conflict with experimental findings or intuitive reasoning. This fact is possibly due to the requirement that zero probability is assigned to irrational choices in these concepts. Here, we introduce the epistemic notion of common belief in utility proportional beliefs which also attributes positive probability to irrational choices, restricted however by the natural postulate that the probabilities should be proportional to the utilities the respective choices generate. Besides, we propose a procedural characterization of our epistemic concept. With regards to experimental findings common belief in utility proportional beliefs fares well in explaining observed behavior. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Christian Bach & Andrés Perea, 2014. "Utility proportional beliefs," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(4), pages 881-902, November.
    • Handle: RePEc:spr:jogath:v:43:y:2014:i:4:p:881-902
    DOI: 10.1007/s00182-013-0409-3
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    References listed on IDEAS

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    Cited by:

    1. Benjamin Patrick Evans & Mikhail Prokopenko, 2024. "Bounded rationality for relaxing best response and mutual consistency: the quantal hierarchy model of decision making," Theory and Decision, Springer, vol. 96(1), pages 71-111, February.
    2. Mounir, Angie & Perea, Andrés & Tsakas, Elias, 2018. "Common belief in approximate rationality," Mathematical Social Sciences, Elsevier, vol. 91(C), pages 6-16.
    3. Bonanno Giacomo & van der Hoek Wiebe & Perea Andrés, 2018. "Introduction to the Special Section on Logic and the Foundations of Game and Decision Theory (LOFT12)," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(2), pages 1-3, July.

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