Informational Aspects of a Class of Subjective Games of Incomplete Information

Abstract : The key assumptions upon which the development of game theory was initially based are the following: (1) The rules of the game are common knowledge to all the players of the game; (2) The players have the same perception (model) of the game; (3) Players are fully committed to a priori strategies; and (4) Players are rational. Assumptions are quite restrictive as these do not hold in many real-life economic, political, military and other social situations. This is why, as game theory developed, attempts were made to relax some of these assumptions. This paper relaxes and modifies assumptions, and formulates a class of games which shall be called Subjective Games. The players have different perceptions (models) of the game that is being played. It is further assumed that each player considers that the other players have models of the game which is the same as his own model. Moreover, it is deemed that each player is rational within his own subjective view of the decision problem. Under these assumptions, the authors study one-stage games as well as repeated games.