Accounting for Tastes

Ken Binmore

in Playing for Real Coursepack Edition

Published in print October 2012 | ISBN: 9780199924530
Published online April 2015 | e-ISBN: 9780190261399 | DOI:
Accounting for Tastes

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This chapter explains how a rational player in a risky situation will behave. Game theorists show payoffs to model how the players of a game choose between the alternatives available to them. In game theory, it is assumed that what the players choose in a given situation is already known; it is only when they play games together that the researcher has to make some deductions concerning their moves and preferences. This chapter explains that people behave as though their aim were to maximize a utility function, making it clear that their choice of behavior is always consistent. If one assumes that people behave inconsistently, then he is challenging the theory and the notion that people cannot generate utility benefits for themselves. In short, economic theory in general and game theory in particular, are useful predictive tools once conditions become favorable.

Keywords: rational player; game theorists; game theory; utility function; utility benefits

Chapter.  13013 words.  Illustrated.

Subjects: Microeconomics

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