Dynamic Games Flashcards
When strategic situations are dynamic, it means players take actions…
Sequentially
Dynamic games are also called … … games
Extensive form
What does complete information mean?
Complete information means that the players know the payoffs for all possible outcomes, and can observe past actions
How are extensive form games often represented?
Decision tree (graphically)
Why is there a finite number of actions at each node?
There is a finite number of options at each node for simplicity
What does each decision node represent?
Each decision node represents a player the must take an action
What are the end nodes and what do they have?
They are terminal nodes and they have outcomes and payoffs attached to them
What is a strategy?
A strategy is a complete contingent plan for a player, describing what a player must do in all situations
In extensive form games, what must a strategy prescribe?
In the extensive form game, a strategy must prescribe which actions a player must take under all possible circumstances
Why do possible strategies involve seemingly needless options?
Because we need to be able to see what a player would’ve done in that situation, so that we can analyse other player’s best responses
What are real life examples of an “incredible” threat?
Speeding tickets (No camera even if you break the law) etc
What is a subgame?
A game that stems from a node along the main process
What is subgame perfect nash equilibrium?
When there is a Nash Equilibrium at every stage of the decision tree
