Exploring Relations Between Decision Analysis and Game Theory
Jules H. van Binsbergen
University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)
Leslie M. Marx
Duke University - Fuqua School of Business, Economics Group
January 16, 2007
Many authors have argued that proper modeling of the strategic interaction between players requires a game theoretic approach as opposed to a decision theoretic approach. We argue in this paper, however, that there are many environments in which decision analysis can deal with strategic interactions just as well and we present equivalence results for such environments. These equivalence results allow the prescriptive decision analyst to use the standard tools that a sound decision analysis requires, including decision trees and sensitivity analysis, even when confronted with strategic settings.
Number of Pages in PDF File: 19
Keywords: Decision Analysis, Game Theory
Date posted: January 16, 2007
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