Rationality In Extensive Form Games

I would like to use this preface to thank some persons and institutions which have been important during the various stages of writing this book. First of all, I am grateful to Kluwer Academic Publishers for giving me the opportunity to write this book. I started writing the book in 1998 while I was working at the Departament d'Economia i d'Historia Economica at Universidad Autonoma de Barcelona, and continued the writing job from september 1998 to september 2000 at the Departamento de Economfa at Universidad Carlos III de Madrid. The book has been completed while I was visiting the Department of Quantitative Economics at the University of Maastricht from october 2000 to august 2001. I wish to thank these three departments for their hospitality. The book has improved substantially by comments and critique from the following persons who have read parts of the manuscript: Geir Asheim, Eric van Damme, Janos Flesch, Mari-Angeles de Frutos, Diego Moreno, Hans Peters, Antonio Romero and Dries Vermeulen. I should also mention my discussions with Peter Wakker about the decision-theoretic foundations of noncooperative game theory, which have had an important impact on various parts of the book. Finally, I wish to express my warmest gratitude to my parents, my brother and my sister, and, last but not least, to Cati, to whom I dedicate this book.

. This major new book will be of particular interest not only to philosophers but to decision theorists, political scientists, economists, and researchers in artificial intelligence.

Groups of people perform acts that are subject to standards of rationality. The book's theory of collective rationality explains how to evaluate collective acts. The people engaged in a game of strategy collectively produce an outcome, and the theory reveals what makes some outcomes solutions. It generates new equilibrium standards for solutions to cooperative games.

This major contribution to game theory offers this conception of equilibrium in games: strategic equilibrium.

The first textbook to explain the principles of epistemic game theory.

This is a paperback edition of a major contribution to the field, first published in hard covers in 1977. The book outlines a general theory of rational behaviour consisting of individual decision theory, ethics, and game theory as its main branches. Decision theory deals with a rational pursuit of individual utility; ethics with a rational pursuit of the common interests of society; and game theory with an interaction of two or more rational individuals, each pursuing his own interests in a rational manner.

The papers collected in this volume relate to game theory. They aim at the elaboration and discussion of basic con cepts, at the analysis of specific applied models and at the evaluation of experimental evidence. A game is a mathematical model of a situation where several actors with different goals are engaged in strategic inter action. Game theory explores the nature and the consequence. s of rational behavior in games. With respect to several papers in this volume, it seems to be appropriate to comment on later developments. A list of some important references is given at the end of the intro duction. References already included in the collected pa pers are not repeated here. In casual conversation colleagues sometimes observe that the author on the one hand goes to extremes in the elabora tion of the consequences of Bayesian rationality and on the other hand strongly emphasizes the limited rationality of actual decision behavior. This seeming discrepancy is also expressed in the collection presented here. The author thinks that a sharp distinction should be made between nor ~ative and descriptive game theory. This position of "methodological dualism" has been expressed in a comment to Aumann's paper "What is game theory trying to accomplish?" (Aumann, 1985, Selten 1985) Normative game theory has the important task to explore the nature and the consequences of idealized full rationality in strategic interaction. This requires a thorough discuss ion of first principles. Empirical arguments are irrelevant here.