Wordy q's Flashcards
Give an example of a zero sum game which has completely conflicting interests.
Penalty kick
Rock-paper-scissors
Give an example of a game which have completely aligned interests
Escape rooms
Give an example of a mixed motive game?
Working on a group project
Firms setting prices
What is imperfect information
When a player doesn’t know some of the previous moves of the other players
What is incomplete information?
Some players do not know something e.g. payoffs, before the game starts
What is asymmetric information?
Some players know more than others
What is strategic uncertainty?
not knowing what others will choose or have chosen
What benefit do you get being the first mover?
Ability to commit to preferred option
What benefit do you get from being the 2nd mover?
Flexibility to adapt to the choices of other players
In the ultimatum game and the trust game, why might the proposer send positive amounts?
Inequality aversion
expecting negative reciprocity
Altruism
In the ultimatum game, why might the responder reject positive amounts?
inequality aversion
negative reciprocity
Why do players pass in the centipede game?
Failing to do backward induction
Altruism
Why might an equilibria be more focal than others?
Due to shared history, culture and language, we can distinguish which equilibria is more likely
Give a real life example of a ‘game’ which has pareto ranked equiibria
Bank runs either happen or not
What is the difference between payoff dominant and risk dominant equilibria?
Payoff dominant - gives highest total payoffs
Risk dominant - If your beliefs are wrong, you do not lose anything
What is inefficient lock in?
When a game converges to an inefficient equilibrium
How can we facilitate effective coordination?
Allow players to punish eachother
pre-play communication
In the trust game, why might the responder send positive amounts?
Inequality aversion
positive reciprocity
How can we overcome inefficient lock in?
Introducing a bonus for effective cooperation
communication by a leader
repeat the game
feedback
What are some mechanisms to sustain collusion?
Price-matching guarantee
communication
What are strategic substitutes?
e.g. Cournot. If the other firm cuts production you want to increase yours
Explains the downward sloping BRF
What are strategic complements?
e.g. Bertrand. If the other firm cuts prices, you want to cut yours
Explains the upward sloping BRF
What are all the rationalizable strategies in cournot?
The NE
What are all the rationalizable strategies in bertrand?
The NE and anything above
Give an example of a rent-seeking game?
Competition in sports - expending costly effort
R&D investments
Why might behaviour differ from NE (4)
NE sometimes assumes that people are selfish EU maximisers
NE assumes people have unlimited cognitive abilities
NE assumes that people have correct beliefs
NE is not sensitive to incentives
What is the idea behind the quantal response equilibrium
Players best respond to each other but make mistakes. The more detrimental the mistake is to their payoffs, the less likely they are to make this mistake
How can we expect players to converge to NE?
Through deliberation of the NE
Through learning
What are 2 main ways to model learning in games? Explain
Belief learning - forming beliefs about what the opponent will do based on the observed past play and best respond to this belief
Reinforcement Learning - choosing strategies that did well in the past
Under what conditions does behaviour converge to NE?
Repeated interactions.
Players are re-matched.
players receive good feedback on mistakes and how to correct them.
Game is simple or complexity is reduced.
Why would players expend more effort than NE predicts?
If a player is risk seeking
non-monetary joy of winning
What are some real-life examples of Prisoners dilemma?
Carbon emissions
Overuse of common-pool resources e.g. fishing
cooperation in group projects
What is the difference between a conditional and an unconditional strategic move?
Unconditional strategic move is where your move doesn’t depend on what others do
Conditional moves are when you specify how you’ll respond to a certain move of the other player
Name a real life example of a game of chicken
Situation where 1 person is enough to solve the problem
- one housemate has to clean the kitchen
- Nuclear proliferation and other situations where no one wants to back down
What is commitment
Create a pregame in which you would commit to a strategy, changing the game from simultaneous to sequential.
What are the two types of commitment?
Restrict own freedom to act
Change own payoff
When are decisions strategic substitutes?
If the BRF are downward sloping
When are decisions strategic compliments?
If the BRF is upward sloping
