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Two-Person Second-Order Games, Part 1: Formulation and Transition Anatomy

Yu, Po Lung and Larbani, Moussa (2009) Two-Person Second-Order Games, Part 1: Formulation and Transition Anatomy. Journal of Optimization Theory and Applications, 141 (3). pp. 619-639. ISSN 0022-3239

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It is well known that human psychology determines his/her action and behavior. This fact has not been fully incorporated in game theory. This paper intends to incorporate human psychology in formulating games as people play them. In Part 1 of the paper, we formulate a two-person game by the habitual domain theory and the Markov chain theory. Using the habitual domains theory, we present a new model describing the evolution of the states of mind of players over time, the two-person second-order game. We introduce the concept of the focal mind profile as well as the solution concept of the win-win mind profile. In addition, we provide also a method to predict the average number of steps needed for a game to reach a focal or win-win mind profile. Then, in Part 2 of the paper, under some reasonable assumptions, we derive the possibility theorem stating that it is always possible to reach a win-win mind profile when suitable conditions are satisfied.

Item Type: Article (Journal)
Additional Information: 3917/7871
Uncontrolled Keywords: Habitual domains · Normal form games · Second-order games · Win-win mind profiles · Markov chains
Subjects: Q Science > QA Mathematics
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Economics and Management Sciences > Department of Business Administration
Depositing User: Nur' Aini Abu Bakar
Date Deposited: 25 Nov 2011 06:16
Last Modified: 25 Nov 2011 06:16
URI: http://irep.iium.edu.my/id/eprint/7871

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