A Bayesian Theory of Games

Summary "A Bayesian Theory of Games" introduces a new game theoretic equilibrium concept: Bayesian equilibrium by iterative conjectures (BEIC). The new equilibrium concept achieves consistencies in results among different types of games that current games theory at times fails to. BEIC requires players to make predictions on the strategies of other players starting from first order uninformative predictive distribution functions (or conjectures) and keep updating with Bayesian statistical decision theoretic and game theoretic reasoning until a convergence of conjectures is achieved. In a BEIC, conjectures are consistent with the equilibrium or equilibriums they supported and so rationality is achieved for actions, strategies and beliefs and (statistical) decision rule. Given its ability to typically select only a unique equilibrium in games, the BEIC approach is capable of analyzing a larger set of games than current games theory, including games with noisy inaccurate observations and games with multiple sided incomplete information games. Key Features Provides a unified and consistent analysis of many categories of games. Its solution algorithm is iterative and has good computation properties. Can analyze more types of games than current existing games theory. The equilibrium concept and solution algorithm are based on Bayesian statistical decision theory. In the new equilibrium, rationality is achieved for action, strategy, belief (both prior and posterior) and decision rule. Has great application value for it could solve many types of games and could model beliefs. The Author Dr Jimmy Teng currently teaches at the School of Economics of the University of Nottingham (Malaysia Campus). He is the author of many articles and two books. Readership Games theorists, decision theorists, economists, mathematicians, statisticians, operational researchers, social scientists, management researchers, public policy researchers, computer scientists Contents Introduction Sequential games with incomplete information and noisy inaccurate observation Sequential games with perfect and imperfect information Simultaneous games Conclusions References Index