L18 - Game Theory Flashcards
What is Game Theory?
It’s a tool used to predict agent behaviour in strategic situations.
What is a payoff?
Strategies determine how well players do.
What is a simultaneous move game?
Its a game where both players make a decision at the same time.
How is the normal form represented?
As a matrix.
What is a dominant strategy?
Situation where the player’s best strategy is chosen regardless of others choices.
What is a Nash equilibrium? (Non-Cooperative Equilibrium)
No player can do better than their chosen strategy, given their beliefs of how other players will play.
Can be multiple Nash Equilibria or none at all.
What are the requirements of the Nash Equilibrium?
(1) Each player must be playing a best response against the opinion of how other players will play
(2) The opinions must be correct
What is a sequential-move game?
Where A moves first then B based on the actions of A.
What is the extensive form?
Represents the sequential-move game as a tree diagram.
What is the Sub-game perfect Nash equilibria?
Based on each subgame in the tree diagram. Where each subgame has a Nash Equilibrium.
We calculate it via Backward Induction.
HOW TO DO IT IS ON NOTES
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