Lecture 3

Question 1

backwards induction = ?

Answer 1

procedure by which a player (in a sequential game) chooses a strategy by anticipating the strategies the other player will adopt in response to their choice

Question 2

first mover advantage = ?

Answer 2

an advantage gained by a company that first introduces a product to the market or any entity that makes the first action

Question 3

is the nash equilibrium based on who controls the game?

Answer 3

yes

the first mover dictates what the mutual best response will be

Question 4

disagreement game = ?

Answer 4

a sequential game in which the first mover has a higher payoff as they set the terms, and the second mover must comply and accept that they’ll be worse off

Question 5

the ultimatum game = ?

Answer 5

first mover (proposer) sets terms of the deal, second mover (responder) decides whether to accept or decline.

declining will result in a (0,0) payoff