Journal Article Welfare Economics of Variable Tastes Get access John C. Harsanyi John C. Harsanyi Brisbane, Australia Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 21, Issue 3, 1953, Pages 204–213, https://doi.org/10.2307/2295773 Published: 01 January 1953

[In his paper, extasciicircum1 Roth has used a three-person game example to illustrate certain difficulties connected with generalizations of the Shapley value for games without side payment. This note argues that cooperative solution concepts in general often give rise to similar difficulties, and that the best way of avoiding them is to analyze cooperative games by means of noncooperative bargaining models.]

The von Neumann-Morgenstern theory of games does not yield determinate solutions (corresponding to unique payoff vectors) for two-person variable-sum games and for n-person games. The present paper outlines a general theory of rational behavior in game situations which does yield determinate solutions for all classes of games. The theory is based on two classes of rationality postulates: those defining rational behavior as'such, and those defining rational expectations concerning the other players' behavior. It is argued that this new approach greatly increases the possibilities for the application of game theory in economics and the other social sciences.

John C. Harsanyi, Approaches to the Bargaining Problem Before and After the Theory of Games: A Critical Discussion of Zeuthen's, Hicks', and Nash's Theories, Econometrica, Vol. 24, No. 2 (Apr., 1956), pp. 144-157

One of the great intellectual achievements of the twentieth century is the Bayesian theory of rational behavior under risk and uncertainty. Many economists, however, are still unaware of how strong the case really is for Bayesian theory, and many more fail to appreciate the far-reaching implications the Bayesian concept of rationality has for ethics and welfare economics. The purpose of this paper is to argue that the Bayesian rationality postulates are absolutely inescapable criteria of rationality for policy decisions; and to point out that these Bayesian rationality postulates, together with a hardly controversial Pareto optimality requirement, entail utilitarian ethics as a matter of mathematical necessity.