From the Logical Point of View: The Chain Store Paradox Revisited

The standard approach to a rational action paradox in game theory (namely, the chain store paradox) has presupposed that the player's beliefs are probabilities represented by functions with values between 0 and 1. However, a general solution must include the possibility that the subjective probabilities take only the values 1 and 0, requiring a non-Bayesian account of belief revision. In this paper, we propose a situation-theoretic diagnosis and solution to the paradox, based on the conception of Austinian propositions relativized to particular situations, as developed by Barwise and Etchemendy.