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On comparing equilibrium and optimum payoffs in a class of discrete bimatrix games
Stanford W
MATHEMATICAL SOCIAL SCIENCES 39 (1): 13-20 JAN 2000

Document type: Article

Language: English

Cited References: 3

Times Cited: 1

Abstract:
In an m(1) x m(2) bimatrix game, consider the case where payoffs to each player are randomly drawn without replacement, independently of payoffs to the other player, from the set of integers 1,2, ...,m(1), m(2). Thus each player's payoffs represent ordinal rankings without ties. In such 'ordinal randomly selected' games, assuming constraints on the relative sizes of m(1) and m(2) and ignoring any implications of mixed strategies, it is shown that payoffs to pure Nash equilibria (second-degree) stochastically dominate payoffs to pure Pareto optimal outcomes. Thus in such games where pure strategy sets do not differ much in size and payoffs conform with concave von Neumann-Morgenstern utility functions over ordinally ranked outcomes, players would prefer (ex ante) a 'random pure strategy Nash equilibrium payoff to a 'random pure Pareto optimal outcome payoff. (C) 2000 Elsevier Science B.V. All rights reserved.

Author Keywords:
bimatrix games, equilibrium, optimum payoffs

Addresses:
Stanford W, Univ Illinois, Dept Econ M1C 144, Room 2103,601 S Morgan St, Chicago, IL 60607 USA
Univ Illinois, Dept Econ M1C 144, Chicago, IL 60607 USA

Publisher:
ELSEVIER SCIENCE BV, AMSTERDAM

IDS Number:
270KQ

ISSN:
0165-4896

Article 11 of 40

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