On the Expected Value of Games with Absentmindedness

Abstract

Piccione and Rubinstein argue that a seemingly paradoxical form oftime inconsistencycan arise in games of imperfect recall. Their argument depends on calculating the expected value of a game from the standpoint of a player in the middle of play. We claim that this concept is not well defined in games with absentmindness (where two nodes on a path can be in the same information set) without additional assumptions. We show that, under some reasonable assumptions, no time inconsistency arises. Different assumptions will validate Piccione and Rubinstein's calculations, but these are such as to remove the appearance of paradox.Journal of Economic LiteratureClassification Numbers: C70, D80, D84. © 1997 Academic Press.