Two-Person Second-Order Games,Part 1: Formulation and Transition Anatomy |
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Authors: | P. L. Yu M. Larbani |
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Affiliation: | (1) Institute of Information Management, National Chiao Tung University, Hsinchu, 30010, Taiwan;(2) School of Business, University of Kansas, Lawrence, KS 66045, USA;(3) Department of Business Administration, Kainan University, 1 Kainan Road, Luchu, Taoyuan, 33857, Taiwan;(4) Department of Business Administration, IIUM University, Jalan Gombak, 53100 Kuala Lumpur, Malaysia |
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Abstract: | 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. This research was partially supported by the National Science Council, Taiwan, NSC96-2416-H009-013. |
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Keywords: | Habitual domains Normal form games Second-order games Win-win mind profiles Markov chains |
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