Since 2014
Solution of Traveler’s Dilemma
The Central European Review of Economics and Management
View Archive Info| Field | Value | |
| Title |
Solution of Traveler’s Dilemma
Solution of Traveler’s Dilemma |
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| Creator |
OSIECKA, Gabriela
JASIŃSKI, Maciej |
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| Subject |
ekonomia; teoria gier
game theory, Traveler's dilemma, perfectly rational player, backward induction C70 game theory, Traveler's dilemma, perfectly rational player, backward induction C70 |
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| Description |
Aim: The aim of the article is to show: 1) that the reasoning of perfectly rational players presented in 1994 by the author of the Traveler's Dilemma Kaushik Basu is incorrect and therefore leads to wrong conclusions, 2) how the reasoning of these players should look like and what solution it leads to. Design / Research methods: Logical analysis. Conclusions / findings: Perfectly rational Traveler’s Dilemma players should use, according to game theory, so-called retrograde (iterative) induction. This is wrong, as in the set of Traveler’s Dilemma games results the principle of transitivity is not met. We believe that perfectly rational players will achieve a better result when they make a random decision from a suitably limited set of decisions. After applying this method of decision making, perfectly rational players will achieve a result similar to those obtained by real players in experiments. Thus, the paradox described in the theory of games disappears, that perfectly rational players achieve worse results than real players Originality / value of the article: A new way of making decisions in the Traveler’s Dilemma game. Implications of the research: A new way of making decisions in other games similar to the Traveler’s Dilemma may allow to find new solutions in these games. Limitations of the research: The described decision-making method can potentially be used in decision-making situations when the following five conditions are met: 1) the set of possible decisions of each player is greater than 2, 2) the winning matrix is known to both players and both know the purpose of their choices, 3) when it is played once with an unknown opponent, 4) when both players have to make their decision without knowing the opponent's choice, 5) when there is no decision, which is a stable balance point or when it is, but its choice means that the player does not achieve a satisfying result.
In game theory The Traveler’s Dilemma (TD), devised by Kaushik Basu, is a paradox, inter alia, because the solution considered in theory as rational turns out worse than the results achieved in experiments. Perfectly rational players should apply a backward induction in their reasoning.This paper aims to:1) prove that backward induction cannot be applied in TD, as in this case it is bad reasoning,2) present the reasoning which perfectly rational players should adopt and define a rational decision in TD. It will turn out that this is no longer different from the decisions resulting from experiments. This paper addresses the problem to the players who:1) are perfectly rational in striving for the best possible result for themselves,2) both know that they are playing against with a perfectly rational player,3) play the game only once with a particular player. |
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| Publisher |
WSB University in Wroclaw Publishing Department
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| Contributor |
Wyższa Szkoła Bankowa we Wrocławiu
Wyższa Szkoła Bankowa we Wrocławiu |
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| Date |
2018-09-27
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Scientific Article Artykuł naukowy |
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| Format |
application/pdf
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| Identifier |
http://ojs.wsb.wroclaw.pl/index.php/WSBRJ/article/view/502
10.29015/cerem.502 |
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| Source |
The Central European Review of Economics and Management; Vol 2, No 3 (2018); 173-164
The Central European Review of Economics and Management; Vol 2, No 3 (2018); 173-164 2544-0365 2543-9472 |
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| Language |
eng
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| Relation |
http://ojs.wsb.wroclaw.pl/index.php/WSBRJ/article/view/502/397
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| Rights |
Copyright (c) 2018 WSB University in Wroclaw
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