Topic 5 - Thinking Strategically Flashcards
What is “Game Theory”?
Game theory is a method of understanding how people interact based on the constraints that limit their actions, their motives, and their beliefs about what others will do.
What is a “Social Dilemma”?
A situation in which actions taken independently by individuals in pursuit of their own private objectives result in an outcome which is inferior to some other feasible outcome that could have occurred if people had acted together, rather than as individuals.
What is the “Tragedy of the Commons”?
A theory that common property or common resources are often overexploited.
What is “Free Riding”?
Free riding is a situation in which one person/party bears all the costs of an action while everyone enjoys the benefits.
Define “Social Interaction”?
Situations in which there are two or more people and the actions taken by each person affects both their own outcome and other people’s outcomes.
Define “Strategic Interaction”?
A social interaction in which the participants are aware of the ways that their actions affect others (and the ways that the actions of others affect them).
Define “Strategy”?
An action (or a course of action) that a person may take when that person is aware of the mutual dependence of the results for herself and for others. The outcomes depend not only on that person’s actions, but also on the actions of others.
What is a “Game”?
A game is a model of strategic interaction that describes the players, the feasible strategies, the information that the players have, and their payoffs.
What is the “Best Response”?
In game theory, the best response refers to the strategy that will give a player the highest payoff, given the strategies that the other players select.
What is the “Dominant Strategy”?
In game theory, a dominant strategy is one that yields the highest payoff for a player, no matter what the other players do.
What is the “Dominant Strategy Equilibrium”?
In game theory the dominant strategy equilibrium is an outcome of a game in which every player plays his or her dominant strategy.
Define “Nash Equilibrium”?
A Nash equilibrium is a set of strategies, one for each player in the game, such that each player’s strategy is a best response to the strategies chosen by everyone else.
Define “Prisoner’s Dilemma”?
The prisoner’s dilemma describes a game in which the payoffs in the dominant strategy equilibrium are lower for each player, and also lower in total than if neither player played the dominant strategy,
