GAME THEORY

Question 1

Cooperative game theory

Answer 1

A game theory setting where the participants are also working together to achieve some goal, while also competing in some way.

Question 2

Game theory

Answer 2

The study of competitive strategic decision-making where the outcome of each participant’s actions is dependent on another participant’s actions.

Question 3

Mixed strategy/randomized strategy

Answer 3

A strategy where a participant’s action is determined randomly according to probabilities – for example, in “rock, paper, scissors”, someone who randomly chooses between the three options with probability 1
/3 each is using a mixed strategy.

Question 4

Prisoner’s dilemma

Answer 4

A situation in game theory where each participant would benefit if all participants act in a certain way, but each participant individually has incentive to not act that way.

Question 5

Stable equilibrium

Answer 5

A situation in game theory where, given each participant’s current choice of action, no participant can do better by changing actions.