Game Theory Flashcards
What is a dominant strategy?
It’s the best strategy no matter what the other player does
What is a Nash equilibrium?
A pair of strategies is a Nash equilibrium if one player’s choice is optimal given the other player’s choice and vice versa
What is a pure strategy?
When a player is going to certainly play a given action i.e with probability=1
What is a mixed strategy equilibrium?
When the probabilities are such that the player is indifferent between his strategies
How do you derive best response curves?
- Solve the probability inequalities for when a player would prefer to play each strategy and for when they’d be indifferent
- Show the range of probabilities for which the other player plays a pure strategy
What are zero sum games?
Zero sum games are games where the pay-off in each cell equals zero
In repeated games, when will a player not deviate from the globally optimal strategy?
A player will not deviate from the globally optimal strategy if the present value of remaining is at least as high as the present value of deviation
What is an extensive form game?
When the strategies are represented in a decision tree as opposed to a matrix
How is the fact that players can’t see each other’s choices shown in an extensive form game?
We use what’s called an information set which is when a circle is drawn around the nodes at which the player takes it’s decision
When is a Nash equilibrium subgame-perfect?
When the players’ strategies constitute a Nash equilibrium at every subgame
