Mixed-strategy nash equilibrium based upon expected utility and quadratic utility

Research output: Journal PublicationsJournal Article (refereed)

10 Citations (Scopus)

Abstract

The notion of a mixed-strategy Nash equilibrium suffers from three inherent difficulties. First, given the equilibrium strategies of other players, there are many best replies. Second, the equilibrium is unstable. Third, comparative statics results are counterintuitive. We demonstrate that these difficulties all have their origin in von Neumann and Morgenstern′s expected utility. In contrast, players with “quadratic utility” have unique best replies and the Nash equilibrium appears to yield intuitive comparative statics results. Journal of Economic Literature Classification Number: C72.

Original languageEnglish
Pages (from-to)139-150
Number of pages12
JournalGames and Economic Behavior
Volume9
Issue number2
DOIs
Publication statusPublished - 1 Jan 1995
Externally publishedYes

Fingerprint

Mixed strategy
Nash equilibrium
Expected utility
Comparative statics
Economics

Cite this

@article{06c10767c85e41928a3e2b9b4a587ade,
title = "Mixed-strategy nash equilibrium based upon expected utility and quadratic utility",
abstract = "The notion of a mixed-strategy Nash equilibrium suffers from three inherent difficulties. First, given the equilibrium strategies of other players, there are many best replies. Second, the equilibrium is unstable. Third, comparative statics results are counterintuitive. We demonstrate that these difficulties all have their origin in von Neumann and Morgenstern′s expected utility. In contrast, players with “quadratic utility” have unique best replies and the Nash equilibrium appears to yield intuitive comparative statics results. Journal of Economic Literature Classification Number: C72.",
author = "Cheng, {Leonard K.} and Min Zhu",
year = "1995",
month = "1",
day = "1",
doi = "10.1006/game.1995.1011",
language = "English",
volume = "9",
pages = "139--150",
journal = "Games and Economic Behavior",
issn = "0899-8256",
publisher = "Academic Press Inc.",
number = "2",

}

Mixed-strategy nash equilibrium based upon expected utility and quadratic utility. / Cheng, Leonard K.; Zhu, Min.

In: Games and Economic Behavior, Vol. 9, No. 2, 01.01.1995, p. 139-150.

Research output: Journal PublicationsJournal Article (refereed)

TY - JOUR

T1 - Mixed-strategy nash equilibrium based upon expected utility and quadratic utility

AU - Cheng, Leonard K.

AU - Zhu, Min

PY - 1995/1/1

Y1 - 1995/1/1

N2 - The notion of a mixed-strategy Nash equilibrium suffers from three inherent difficulties. First, given the equilibrium strategies of other players, there are many best replies. Second, the equilibrium is unstable. Third, comparative statics results are counterintuitive. We demonstrate that these difficulties all have their origin in von Neumann and Morgenstern′s expected utility. In contrast, players with “quadratic utility” have unique best replies and the Nash equilibrium appears to yield intuitive comparative statics results. Journal of Economic Literature Classification Number: C72.

AB - The notion of a mixed-strategy Nash equilibrium suffers from three inherent difficulties. First, given the equilibrium strategies of other players, there are many best replies. Second, the equilibrium is unstable. Third, comparative statics results are counterintuitive. We demonstrate that these difficulties all have their origin in von Neumann and Morgenstern′s expected utility. In contrast, players with “quadratic utility” have unique best replies and the Nash equilibrium appears to yield intuitive comparative statics results. Journal of Economic Literature Classification Number: C72.

UR - http://www.scopus.com/inward/record.url?scp=0000153243&partnerID=8YFLogxK

U2 - 10.1006/game.1995.1011

DO - 10.1006/game.1995.1011

M3 - Journal Article (refereed)

AN - SCOPUS:0000153243

VL - 9

SP - 139

EP - 150

JO - Games and Economic Behavior

JF - Games and Economic Behavior

SN - 0899-8256

IS - 2

ER -