L3. Tools to study International Politics

Question 1

Strategic interaction

Answer 1

making choices while anticipating the actions of others and the consequences of alternative decisions.

Question 2

Strategy

Answer 2

complete and contingent set of actions

Question 3

People are assumed to be rational

Answer 3

• They have preferences (complete and transitive)
• They have beliefs
• They face constraints
• They do what they believe is in their best interest.

Question 4

Choices of Actors

Answer 4

• Assumption of rational actors, who compare options thanks to utility functions
• Utility: a function assigns a real number to each outcome.
  so, if we prefer A to B, u(A) > u(B)

Question 5

Decision makers often face uncertainty over outcomes

Answer 5

• Assign each possible outcome a utility (or costs and benefits)
• Higher numerical values mean stronger preference
• Assign each possible outcome a probability (between 0 and 1, and sum up to )
• Calculate expected utility

Question 6

Choices for expected utility are in

Answer 6

isolation

Question 7

Components of a game

Answer 7

• a set of players
• a set of actions that each player can take (strategies)
• a mapping from the various actions taken by players and outcomes

Question 8

Each actor needs to specify

Answer 8

what to do under every contingency in the game, including those not likely to happen.

Question 9

Nash Equilibrium

Answer 9

Equilibrium if no player can benefit by unilaterally changing its actions.

Question 10

All games have at least

Answer 10

one Nash Equilibrium, some have more.

• Pure Strategies (Choosing an action for sure); strategy set: set of pure strategies
• Mixed Strategies (Choosing actions probabilistically)

Question 11

Normal Form vs. Extensive Form Games

Answer 11

Normal form of a game: when represented by a matrix.

Extensive form representation: If players move sequentially.

Question 12

Normal form of a game only possible when:

Answer 12

• moves are simultaneous

- previous moves are not observed before the next move is chosen- imperfect information

Question 13

Solving extensive form games

Answer 13

Backward induction

Question 14

Backward induction: how

Answer 14

• Look ahead to terminal nodes and work backwards to understand what other players will do at each choice node.
• Based on the fact that at each decision node (or choice point), a player can figure out how the game is going to be played going forward
• For this to be possible, each player needs to know
  • the preferences of the other player (i.e complete information)
  • who has moved when (i.e. perfect information)
• Representing a game in extensive form eliminates some implausible Nash Equilibria

Question 15

Subgame Perfect Nash Equilibrium

Answer 15

in a SPNE, Strategy is a best response at each node, given strategies of other players

Question 16

Incentive to Bluff for the example

Answer 16

• If DPRK knows US willingness to fight,
  when US are willing to fight, they choose compromise
  when US are not willing to fight, they choose sanctions
• If DPRK does not know, every time US compromises, DPRK knows that US are willing to fight and so will compromise too.