Existence and dynamic consistency of Nash equilibrium with non-expected utility preferences

Eddie Dekel; Zvi Safra; Uzi Segal

doi:10.1016/0022-0531(91)90039-7

Existence and dynamic consistency of Nash equilibrium with non-expected utility preferences

Eddie Dekel^*, Zvi Safra, Uzi Segal

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

42 Scopus citations

Abstract

Sufficient conditions for the existence of a Nash equilibrium are given when preferences may violate the reduction of compound lotteries assumption (RCLA). Without RCLA decision makers may not be indifferent between compound lotteries which have the same probabilities of final outcomes. Therefore the conditions depend on how players perceive the game-whether they view themselves as moving first or second. We also review conditions under which the equilibria will be dynamically consistent.

Original language	English (US)
Pages (from-to)	229-246
Number of pages	18
Journal	Journal of Economic Theory
Volume	55
Issue number	2
DOIs	https://doi.org/10.1016/0022-0531(91)90039-7
State	Published - Dec 1991

Funding

* The authors thank Edi Karni, Ariel Rubinstein, David Schmeidler, and Menahem Yaari for helpful comments and the National Science Foundation and SSHRC for financial support. ’ A seminal reference is Machina [19]. For surveys of the literature, including empirical findings and generalizations of EU, see, for example, Macrimmon and Larson [24], Machina [2&22], and Fishburn [7].

ASJC Scopus subject areas

Economics and Econometrics

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title = "Existence and dynamic consistency of Nash equilibrium with non-expected utility preferences",

abstract = "Sufficient conditions for the existence of a Nash equilibrium are given when preferences may violate the reduction of compound lotteries assumption (RCLA). Without RCLA decision makers may not be indifferent between compound lotteries which have the same probabilities of final outcomes. Therefore the conditions depend on how players perceive the game-whether they view themselves as moving first or second. We also review conditions under which the equilibria will be dynamically consistent.",

author = "Eddie Dekel and Zvi Safra and Uzi Segal",

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AU - Safra, Zvi

AU - Segal, Uzi

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N2 - Sufficient conditions for the existence of a Nash equilibrium are given when preferences may violate the reduction of compound lotteries assumption (RCLA). Without RCLA decision makers may not be indifferent between compound lotteries which have the same probabilities of final outcomes. Therefore the conditions depend on how players perceive the game-whether they view themselves as moving first or second. We also review conditions under which the equilibria will be dynamically consistent.

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Existence and dynamic consistency of Nash equilibrium with non-expected utility preferences

Abstract

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