4. A Beautiful Equilibrium

Question 1

What is a Nash equilibrium?

Answer 1

An outcome where each player chooses the strategy that best serves their interests, in response to others’ strategies that do the same, where no player has any reason to unilaterally change their strategy

Question 2

How should the Nash equilibrium be used?

Answer 2

As the starting point for the analysis of almost all games; then think of reasons why and how the outcome might differ from the Nash prediction

Question 3

Does every game have a Nash equilibrium?

Answer 3

Yes, if mixed strategies are allowed

Question 4

Does every game have a unique Nash equilibrium?

Answer 4

No

Question 5

What is a Schelling point?

Answer 5

A focal point, a convergent obvious equilibrium for all players

Question 6

What is a dominated strategy?

Answer 6

A strategy that is uniformly worse for a player

Question 7

What is the approach for analyzing payoff matrices?

Answer 7

Successive elimination of dominated strategies and never best response strategies

Question 8

What is the Nash equilibrium in games with infinitely many strategies?

Answer 8

The intersection of the payoffs