Game Theory and Experiments Flashcards
Define: Nash equilibrium
A set of strategies for all players that are all best responses at once
Set of strategies is stable if no player has an incentive to unilaterally deviate
Define: Epistemic
People reason their way to eq
Define: evolution
Groups mutually learn their way to eq
What does GT predict for a finitely repeated PD?
No one should cooperate, unraveling via backward induction
What happens in reality for a finitely repeated PD?
Cooperate early on in the game, defect later on
What does GT predict for an infinitely repeated PD?
Can be cooperation if discount rate high enough, using a Grimm trigger strategy
How are infinitely repeated PD games won?
Can’t run forever so use a random prob of the game ending, e.g. a dice roll
What happens in reality for an infinitely repeated PD?
Coop doesn’t when discount rates too low (Dal & Fredutte, 1978)
Higher discount rates lead to higher levels of coop (Dal Bo, 2005)
Outline: coordination games
Want to match partners action to max payoff
Multiple eq, GT doesn’t provide a prediction as to which is chosen
Outline the Stag&Hare game
….
Outline the results of One-Shot coordination games
People tend to play inefficient, risk dominant eq
Outline the results of Strangers-matching coordination games
Convergence on risk dominant eq, but depends on what happens initially and the cost of mismatching
Outline the results of Partners-Matching coordination games
Coordinate to Pareto om eq
Willingness to give up payoffs in short term to demonstrate serious about playing Pareto dom eq
Does communication help in coordination games?
Can help, but depends on how done….
1 - One-way: works well
2 - 2-way: Doesn’t work as well….
