In traditional game theory the analysis of a game relies on individual utility values associated with the various outcomes of the game. In particular, in an extensive form game, each player is assumed to have a utility function defined over the set of leaves of the game tree. In games of incomplete information, such utility values may not be common knowledge. The standard remedy to this situation, following Harsanyi [3], is to expand the game to account for the various possible "type" of players which are jointly drawn from some commonly known probability distribution. The assumption is that such an expansion of the game can be constructed without strategically analyzing the game, since such an analysis would obviously depend on utilities from various outcomes. In this paper, we argue that the formation of preferences over outcomes, and the strategic analysis of the game, may be intertwined to the extent that common resolution procedures, such as backwards induction, cannot not be applied.
By: Nimrod Megiddo
Published in: RJ10218 in 2001
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