Savage Games

51 Pages Posted: 20 Jun 2013 Last revised: 25 Jun 2014

See all articles by Simon Grant

Simon Grant

School of Economics, University of Queensland

Idione Meneghel

University of Queensland - School of Economics

Rabee Tourky

University of Queensland - School of Economics

Date Written: June 25, 2014

Abstract

We define and discuss Savage games, which are ordinal games of incomplete information set in L. J. Savage’s framework of purely subjective uncertainty. Every Bayesian game is ordinally equivalent to a Savage game. However, Savage games are free of priors, probabilities and payoffs. Players’ information and subjective attitudes toward uncertainty are encoded in the state-dependent preferences over state contingent action profiles. In the class of games we consider, player preferences satisfy versions of Savage’s sure thing principle and small event continuity postulate. Savage games provide a tractable framework for studying attitudes towards uncertainty in a strategic setting. The work eschews any notion of objective randomization, convexity, monotonicity, or independence of beliefs. We provide a number of examples illustrating the usefulness of the framework, including novel results for a purely ordinal matching game that satisfies all of our assumptions and for games for which the preferences of the players admit representations from a wide class of decision-theoretic models.

Keywords: Bayesian games, multiple priors, non-expected utility, subjective uncertainty, existence of equilibrium, decomposable sets

JEL Classification: C72, D81

Suggested Citation

Grant, Simon and Meneghel, Idione and Tourky, Rabee, Savage Games (June 25, 2014). Available at SSRN: https://ssrn.com/abstract=2281607 or http://dx.doi.org/10.2139/ssrn.2281607

Simon Grant (Contact Author)

School of Economics, University of Queensland ( email )

Brisbane, QLD 4072
Australia

HOME PAGE: http://dl.dropbox.com/u/29045743/Simon_Grant/index.html

Idione Meneghel

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Rabee Tourky

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

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