12: Game Theory

Question 1

repeated games

Answer 1

allow for patience, rewards and punishment

players might cooperate more if they expect to be shamed/sanctioned (for free-riding)

fear retaliation

Question 2

stationary game

Answer 2

identical in its characteristics in each period

Question 3

pure strategy

Answer 3

strategy where player plays actions for sure

Question 4

mixed strategy

Answer 4

probability distribution over pure strategies

Question 5

strictly dominant strategy

Answer 5

always provides greater utility/payoff to a player, no matter what the other’s strategy is

Question 6

weakly dominant strategy

Answer 6

provides at least the same utility/payoff for all of the other’s strategies and strictly greater for some

Question 7

nash equilibrium

Answer 7

occurs if every player’s strategy is a best response to the strategies played by other players

Question 8

discounted utility model

Answer 8

used to model repeated games

discount rate between (0,1)
- lower means less value on future utility and less patient
- higher means more value on future utility and more patient