Abstract
AbstractThis paper establishes a previously unexplored connection between expected utility theory and potential games. Starting with a decision problem with a complete preference relation over lotteries on a finite set of alternatives, we construct a two-person symmetric game using a payoff function that represents the preference relation, and show that if the preference relation satisfies the von Neumann-Morgenstern expected utility axioms then the constructed game is a potential game. Conversely, starting with a two-player symmetric game, we (uniquely) construct a (complete) preference relation over the lotteries using the first player’s payoffs in the game, and show that if the game is a potential game then the resulting preference relation satisfies the expected utility axioms.
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