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Game theory > lectures 12-20 > Flashcards

lectures 12-20 Flashcards

1
Q

Monopolist and competitor Game

A
  • be able to explain the strategies, SPNE, and NE

* *will someone join the market or no?

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2
Q

evolutionary games

A

departing from rationality by modeling a specific type of irrationality
*accompanying nash equil. with some form of behavioral anaylsis

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3
Q

strategies being biologically encoded, heritable so players do not know..

A
  • do not need to know the game
  • have no control over their game
  • gene determines strategy
  • evolution=payoffs of the game represent reproductive success- some behaviors are more successful, less successful are not evolutionarily successful
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4
Q

evolutionary games assumptions

A
  • look at symmetric 2 player games
  • assume very large population pf players who are hard-wired to play specific strategy, so population could involve a mix of strategies
  • players encoded with strategies
  • look at average payoffs by strategies across their pairings, strategies whose payoffs are higher than others grow relative to those in other population mixes
  • departure from rationality and dynamics to reach equil.
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5
Q

How to find equilibrium in evolutionary game

A
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6
Q

Hawks and Doves

A

hawks= some aggressive and prefer to fight
doves= more peaceful dont want to fight
* payofs are shares of resources
*higher share of resources, higher changes of survival and reproduction rates
* if one type is higher than other, reproductive rate is higher and other will die off

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7
Q

evolutionary stable strategy

A

if all members of a pop. adopt it, no mutant strategy can invade, once all members of pop use this strategy there is no rational alternative
**represents no incentive to deviate in NE

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8
Q

evolutionarily stable state

A

populations genetic mix is restored after a distubrance, dynamic property of population, the strategy or mix of strategy will keep the same

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9
Q

the selfish gene

A

evolution is through survival of competing genes

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10
Q

strategic moves mono competitor game

A

monopolist and competitor game, if one fights or concedes (monopolist has higher payoff if competitor plays out so tries to convince player to play out even though competitor has higher payoff w playing in)

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11
Q

examples of strategic moves

A
  • competitor and monopolist game

- golden balls game

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12
Q

strategic moves

A

actions taken at a pregame stage that change strategies of the payoffs of the subsequent game
*original one stage game becomes two stage game

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13
Q

two stage game

A
  • first stage: pre game actions (strategic moves)

- second stage: now modifies original game is played

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14
Q

3 types of pregame actions

A
  • commitments
  • threats
  • promises
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15
Q

Aim of game

A

alter the outcome of the second-stage game to your own advantage, works only if credible

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16
Q

to do something in first game that makes move credible=

A

ancillary move

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17
Q

what is a first move?

A
  • action must be observable/seen by other player

- action must be irreversible

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18
Q

unconditional strategic moves

A
  • commitment: player choose a strategy
  • depends on sequential or simultaneous
  • player A seeks first mover advantage
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19
Q

conditional strategic moves

A

player A picks stretegy based on which strategy other player takes

  • response rule or reaction function
  • A moves in second stage of the game
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20
Q

threats

A

unless action conforms to stated wish, they will respond in a hurtful way
- for every threat there is an implied promise

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21
Q

promise

A

if action conforms to stated wish, will respond in a way that rewards
- for every promise there is an implied threat

22
Q

Commitment game: chicken game

A
  • simultaneous game: 2 pure strategy NE

- player needs to convince other player what move they are making w ancillary move

23
Q

threats and promises games

A

response rules: future action is conditional on what other players do

24
Q

threats games: US and Japan

A

threat: we will close markets if you close yours

- in equil. japan does not plau dominant strategy of closed

25
Q

threat is effective…

A

if both threat and implied promise are credible

  • threat has to be costly, make implicit promise credible
  • big but not too big
26
Q

promise game example: restaurant pricing game

A

typical prisoners dilemma game– dominant strategy but inefficient outcome

27
Q

how to avoid credibility issue?

A

ancillary move

28
Q

promise is effective if

A

if both the promise and implied threat are credible

  • has to be costly, this makes implicit threat credible
  • small promise, but not too small
29
Q

a commitment is successful…

A

only if opponent believes you will care out what you committed to, typically action you commit is not best response

30
Q

entry deterrence game EX/ commitment games

A

making the fight credible

31
Q

credibility: reducing freedom of action

A
  • automatic fulfilment

- delegation

32
Q

automatic fulfilment

A

you can leave choice at stage 2 and hand over to a mechanical device or similar procedure that is programmed to carry out commitment, must demonstrate this to other player

33
Q

delegation

A

you can delegate power to act to another person or organization that is required to follow rules or procedures

34
Q

Burning bridges

A

removing the option to retreat (kamikaze pilots)

35
Q

cutting off communication

A

send message to the other player demonstrating your commitment and then cut off communication

36
Q

credibility: changing your payoffs

A
  • reputation: only good if known, payoffs altered by prospects of repercussion in other games
  • dividing the game into small steps: gradualism, reputation built
  • teamwork
  • irrationality
  • contracts
  • brinkmanship
37
Q

Static Games (Bayesian games)

A
38
Q

strategic uncertainty

A

uncertainty about opponents moves in the past of made at same time as you (EX/ battle of sexes)– game tree representation

39
Q

external uncertainty

A

uncertainty about external circumstances

EX/ farmer planting a crop– makes a decision on whether or not to plant crops based on weather probability

40
Q

perfect information

A

there is neither external no strategic uncertainty

  • no info set encloses two or more nodes (game of 3)
  • all strategic games are imperfect info.
41
Q

incomplete information

A

incomplete info is asymetic

42
Q
  • complete info:
A

all rules and strategies are common info

43
Q

bayesian games

A

games of incomplete info -incentives to reveal or conceal info: signalling
or elicit info: Screening

44
Q

Joe and Una game

A

Una is not informed about joes payoffs, so she does not know how to make her decision
- joe can be a party lover or non-party lover, two different payoffs (50-50)

45
Q

Bayesian nash equil.

A
  • strategy for fully informed player conditional on his type and optimal given expectations about other player
  • stratefy for incompletely informed player optimal given her beliefs about other players
46
Q

BNE simple explanation

A

combo of players strategies so each players strategy is best response to equil. strategies of all players, whatever type of player

47
Q

how to solve for BNE

A
  1. propose strategy combo: fully informed + incomplete informed
  2. calculate beliefs generated by proposed strategies (a. fully informed joe and b. Una)
  3. check each strategy is optimal (consistency check)
48
Q

strategy can be separating or pooling

A

for fully informed player

- so equilibria can be separating or pooling

49
Q

separating strategy

A

when fully informed player chooses a different action depending on type

50
Q

pooling strategy

A

when fully informed player chooses same action no matter the type

Game theory (3 decks)

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