Open AccessExploring Relations Between Decision Analysis and Game Theory
Author(s) -
Jules H. van Binsbergen,
Leslie M. Marx
Publication year - 2007
Publication title -
decision analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.527
H-Index - 22
eISSN - 1545-8504
pISSN - 1545-8490
DOI - 10.1287/deca.1070.0084
Subject(s) - decision analysis , game theory , decision theory , computer science , management science , influence diagram , decision tree , equivalence (formal languages) , evidential reasoning approach , strategic interaction , decision engineering , business decision mapping , decision problem , decision field theory , decision rule , decision model , decision support system , optimal decision , operations research , mathematical economics , artificial intelligence , mathematics , economics , machine learning , microeconomics , discrete mathematics , programming language
Many authors, including Cavusoglu and Raghunathan (2004. Configuration of detection software: A comparison of decision and game theory approaches. Decision Anal. 1(3) 131--148.) in this journal, have argued that proper modeling of the strategic interaction between players requires a game-theoretic approach as opposed to a decision-theoretic approach. We argue in this paper, however, that there are many environments in which decision analysis can deal with strategic interactions just as well, and we present equivalence results for such environments. These equivalence results allow the prescriptive decision analyst to use the standard tools that a sound decision analysis requires, including decision trees and sensitivity analysis, even when confronted with strategic settings. We further present two technical comments on the Cavusoglu and Raghunathan (2004) paper.
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