Exploring Relations Between Decision Analysis and Game Theory

19 Pages Posted: 16 Jan 2007  

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

Date Written: January 16, 2007

Abstract

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.

Keywords: Decision Analysis, Game Theory

Suggested Citation

van Binsbergen, Jules H. and Marx, Leslie M., Exploring Relations Between Decision Analysis and Game Theory (January 16, 2007). Available at SSRN: https://ssrn.com/abstract=957636 or http://dx.doi.org/10.2139/ssrn.957636

Jules H. Van Binsbergen (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/jules_vanbinsbergen

Leslie M. Marx

Duke University - Fuqua School of Business, Economics Group ( email )

Box 90097
Durham, NC 27708-0097
United States

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