Game theory

Question 1

define game theory

Answer 1

predicting the outcome of a game strategy in which participants have incomplete information about the other participants intentions, and the choice of the next move depends critically on the actions of others.

Question 2

what does a game consist of?

Answer 2

players, strategies and payoffs

Question 3

what is a dominant strategy?

Answer 3

regardless of what the other players do, the dominant strategy that provides them with the largest payoff

Question 4

nash equilibrium

Answer 4

no player can do better given the strategies of other players

Question 5

mixed strategy

Answer 5

consisting of possible moves and a probability distribution which corresponds to how frequently each move is to be played; used when he/she is indifferent between strategies and when they want to keep the opponent guessing(setting prices)

Question 6

prisoners dilemma

Answer 6

the game which two prisoners need to decide whether to confess or not confess, showing the dominant strategy, whats pareto optimal

Question 7

battle of the sexes

Answer 7

a man and women can go a fight and the opera, the woman wants to go to the opera, the man wants to go to the fight but they both would prefer the company of each other than be alone.

Question 8

extensive form game

Answer 8

1. number of players
2. sequence in which they make their moves
3. actions
4. information of the previous moves
5. the payoffs

Question 9

dynamic game

Answer 9

players more at the same time (simultaneously)

there is information about each others moves

Question 10

subgame

Answer 10

subset of any game including an initial node

Question 11

subgame perfect nash equilibrium

Answer 11

players and strategies are a nash equilibrium in every game

Question 12

backward induction

Answer 12

from the end of a problem or situation to determine a sequence of optimal actions