Games with Self-Generating Distributions.

In this paper I develop an N-person stochastic game in which each player views himself as facing a Markov decision process. Specifically, every player is assumed to choose his strategy as a policy which is optimal with respect to the process in question. It is clear that such a strategy need not be...

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Publicado en:Review of Economic Studies Vol. 48; no. 3; pp. 511 - 520
Autor principal: Shefrin, H. M.
Formato: Artículo
Publicado: Oxford University Press / USA Jul81
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Acceso en línea:Ver este registro en EBSCOhost
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        atl: Games with Self-Generating Distributions.
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        au: Shefrin, H. M.
        affil: University of Santa Clara
      su:
        Stochastic processes
        Games
        Markov processes
        Economic equilibrium
        Game theory
        Probability theory
        Uncertainty
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        subj:
          Stochastic processes
          Games
          Markov processes
          Economic equilibrium
          Game theory
          Probability theory
          Uncertainty
      ab: In this paper I develop an N-person stochastic game in which each player views himself as facing a Markov decision process. Specifically, every player is assumed to choose his strategy as a policy which is optimal with respect to the process in question. It is clear that such a strategy need not be a best reply to the strategy choices of the other players, so a Nash equilibrium might not be appropriate for this game. Consider the following alternative equilibrium concept. Every player compares the subjective transition probabilities from his Markov decision process with the objective frequencies which he encounters during the course of the game. If no player receives disconfirming evidence about the subjective probabilities he is using, then the game is said to be in informational equilibrium. In this case the subjective probabilities are termed self-generating. Clearly, an informational equilibrium falls into the class of fulfilled expectations or rational equilibria. The main result of the paper is that an informational equilibrium exists for the game under consideration. The motivation for studying this particular class of games derives from the microeconomic treatment of household and firm intertemporal decisions under uncertainty. In economic theory it is common to treat these decision problems within a dynamic programming Markov decision process framework. Here Markov transistion probabilities are used to describe the random prices faced by households and the random demand functions faced by firms. A question which would seem to be of considerable interest involves the problem of how one might model a complete economy in which each agent treats his own decision problem as a Markov decision process. Choosing an appropriate equilibrium concept would naturally be of paramount importance. This is the essential...
      pubtype: Academic Journal
      doctype: Article
      src: R
    language: English
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