Game Theory in Economics

Chapter 4, Preferences and Utility

by Lloyd S. Shapley, Martin Shubik

Download

Full Document

FormatFile SizeNotes
PDF file 3.4 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Purchase

Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback107 pages $25.00 $20.00 20% Web Discount

The fourth chapter of a manuscript dealing with the applications of game theory to economic analysis. This chapter presents a guided tour through those areas of utility theory that relate most closely to the theory of games. While the primary interest is in applying utility theory to develop models for the motivations of individual players in a game, the authors take pains to stress wherever possible the multi-person aspects of utility theory. In that area, an application of game theory to utility theory can sometimes be effected. Some simple but paradoxical bargaining games are analyzed, to see whether the bargainers can have purely ordinal preferences; also, the aggregation of independent preferences is studied to see whether every subset of individuals in a society can have its own independent preference system. There is an extended discussion of the rationales that underlie the use of cardinal utility in economic models. Technical appendixes are included. (See also R-904/1, R-904/2, R-904/3, R-904/6.)

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.