Third Down with a Yard to Go: The Dixit-Skeath Conundrum on Equilibria in Competitive Games

Simon Grant, Atsushi Kajii and Ben Polak
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Ben Polak: Yale University

No 222, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: In strictly competitive games, equilibrium mixed strategies are invariant to changes in the ultimate prizes. Dixit and Skeath argue that this seems counter-intuitive, and it is a challenge to the expected utility theory. We show that this invariance is robust to dropping the independence axiom, but is removed if we drop the reduction axiom. The conditions on the resulting recursive expected-utility model to get the desired outcome are analogous to conditions used in the standard model of comparative statics under risk.

Date: 2000-08-01
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Working Paper: Third Down with a Yard to Go: The Dixit-Skeath Conundrum on Equilibria in Competitive Games (1999)
Working Paper: Third Down with a Yard to Go: The Dixit-Skeath Conundrum on Equilibria in Competitive Games (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:wc2000:0222

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