Game Theory Flashcards
Being rational doesn’t mean that I make my decisions in a way that makes sense to other people but rather in a way that will lead to my best expected payoff.
The payoffs have to reflect the actual preferences of the players. the payoff of two players sometimes is not comparable. people don’t always value only money.
sometimes, it’s difficult to figure out the payoffs.
Finite games: the games has to be sure to end. there can never be an infinite number of choices. the game has to have a finite number of players.
for finite games, order is all that counts. we don’t have to know exact the amount of payoff. this type of payoff is called ordinary payoff.
common knowledge level 1 (private knowledge): each players know the rules of the games
common knowledge level 2: I know that he/she knows the rules of the games
common knowledge level 3: she knows that I know she knows the rules of the games
common knowledge level 4: I know that she knows that I know she knows the rules of the games
……..
(like a hall of mirrors)
3 elements in a game: players, strategies, payoffs
when cooperation involves coordinating behavior, the problem people must solve is a knowledge problem rather than a motivation problem: What do partners need to know about each others’ beliefs to coordinate their behavior?”
how do we anticipate what our social partners will do, when what they do depends on what they expect us to do? This is a profound social cognition problem. How does one read the mind of a mind reader?”
The first level, called private knowledge, involved telling one player that he could earn more by working with his partner, but leaving him in the dark about what his partner’s knows. At the second level, called secondary knowledge, one player knows conditions are good, and knows his partner knows that as well. In the third, one player knows, knows his partner knows, and knows his partner knows that he knows. To create common knowledge, this information was broadcast over a loudspeaker. As predicted, these levels of knowledge dramatically affected how people played the game.
“What we found was that, for private knowledge, even if we varied the payouts, or the number of people involved, only about 15 percent of people cooperated,” Thomas said. “With shared knowledge, we saw about 50 percent, and with common knowledge, it was 85 percent. It was just a whopping effect. That indicated to us that we are very sensitive to this previously unappreciated mental state. Our minds evolved to understand this important kind of social structure, and how different kinds of knowledge can impact it.”
hui
“You can see evidence of these coordination problems everywhere,” Thomas said. “We’ve done work on euphemism and indirect speech, where everyone understands the subtext of what’s being said, though it isn’t explicit. You can also see aspects of it when people talk about taboos or political correctness. When something is taboo, that’s a common-knowledge issue because even though everyone may think it, you can’t say it. There’s even evidence that self-conscious emotions, like guilt or pride or shame, are sensitive to common knowledge, and that certain emotional signals like blushing or crying are built around the idea.”
hui
