séance 9 - game theory and strategic interaction Flashcards
What is the description of a game?
- strategic game
- players
- strategy
- payoffs (measured in utility or money)
what is the assumption that must be made when in a strategic game
players are rational and act in their best interest, which is to choose their strategies to maximize their payoff
what is the best strategy of the golden ball?
whatever the other player does, you get more $ by stealing
what is a dominant strategy?
a strategy is dominant if it yields the highest utility irrespective to the other players’ strategy
what is a best response?
it is the strategy maximizing the payoff of a player, given the strategies of the other players
what is the equilibrium?
it is the solution to the game: what players should be doing if they were all behaving rationally
what is special about the prisoner’s dilemma?
the best strategy and the nash equilibrium is to confess, but it isn’t the most efficient solution (the get less years of prison if they both deny; dilemma - anti coordination game)
TF: strategic interactions are always efficient
F: strategic interactions can get in the way of efficiency (prisoner’s dilemma)
TF: prior communication can change the result of the prisonner’s dilemma?
F, prior communication would not change the result
what is a nash equilibrium?
it is a situation where each player is playing his best response strategy against the other player’s strategy
TF: in the N.E, a player can be better off deviating unilaterally
F, no single player is better off deviating unilaterally (nobody has an incentive to change things alone)
what is special about the battle of the sexes?
there are 2 N.E: we can only predict they will not split up (coordination game with conflict) and there are no dominant strategy
what is special about the game of chicken?
there are two N.E, we can only predict one of them will back down and one challenges
what is special about the moneybox game?
there is one N.E and one dominant strategy: to put nothing in the box. it is called the public good problem, when profit is shared but expense is individual no one contributes and everybody prefers to free ride (getting the benefits without pitching in)
what is different between simultaneous and sequential games?
simultaneous game are played at the same time and represented by a matrix
sequential game are played one after the other and solved backwards by decision tree
