UNSPECIFIED (1991) DERIVING AND ANALYZING OPTIMAL STRATEGIES IN BAYESIAN MODELS OF GAMES. MANAGEMENT SCIENCE, 37 (5). pp. 559-571. ISSN 0025-1909

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Abstract

Wilson (1986) gives a backwards induction algorithm for sequentially obtaining the optimal next move in a repeated Bayesian game. In this paper we show how to identify the form of an optimal solution of such a game by a graphical procedure. By means of the Prisoner's Dilemma game, we illustrate how Wilson's algorithm can be enhanced using the derived analytic form of the solution to produce an explicit optimal strategy. We can then determine not only how P1 should play on all subsequent moves of the game, but also use ideas of Bayes rationality to discuss whether a given model of P2's reactions is realistic.

Item Type:	Journal Article
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Journal or Publication Title:	MANAGEMENT SCIENCE
Publisher:	INST OPERATIONS RESEARCH MANAGEMENT SCIENCES
ISSN:	0025-1909
Date:	May 1991
Volume:	37
Number:	5
Number of Pages:	13
Page Range:	pp. 559-571
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/22675

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