Game Theory and Public Policy

Game Theory and Public Policy

Roger A. McCain

Game theory is useful in understanding collective human activity as the outcome of interactive decisions. In recent years it has become a more prominent aspect of research and applications in public policy disciplines such as economics, philosophy, management and political science, and in work within public policy itself. Here Roger McCain makes use of the analytical tools of game theory with the pragmatic purpose of identifying problems and exploring potential solutions in public policy.

Chapter 9: Imperfect Recall and Aggregation of Strategies

Roger A. McCain

Subjects: economics and finance, game theory, politics and public policy, public policy


We recall that Kuhn (CGT, pp. 193–216) extended and refined the treatment of games in extensive form, including games of “imperfect recall,” that is, games in which a player may not be aware of some of its own earlier moves. (Ch. 3). For non-cooperative analysis, Selten (CGT, pp. 312–54) argues, this multiplicity of agents should be excluded. However, any nontrivial coalition is a compound of two or more agents, so that imperfect recall arises naturally in coalitions. Nevertheless, coalitions seem never to have been discussed for games with imperfect recall. In this chapter we consider two implications of imperfect recall. 9.1 SUPERADDITIVITY In their founding paper of the literature on cooperative solutions for games with given coalition structure, Aumann and Dreze (1974) question the assumption of superadditivity in games in coalition function form.1 The argument for superadditivity is essentially that any vector of strategies available to the two coalitions separately is also available to the merged coalition, so that they can do no worse than to adopt the strategies adopted by the two coalitions separately. Let us call that argument “argument A.” Aumann and Dreze (1974, p. 233) question the argument, although they concede that “superadditivity is intuitively rather compelling.” Nevertheless, they go on to write “. . . ‘acting together’ and sharing the proceeds may change the nature of the game. For example, if two independent farmers were to merge their activities and share the proceeds, both of them might work with less care and energy; the resulting output might...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information