Game theory Flashcards
Dominant strategy
The strategy in a game that produces the best results regardless of the other players strategy
Social dilema
Where individual incentives conflict with efficiency (seen in prisoners dilemma)
Nash equilibrium
The combination of strategies that neither player has an incentive to change strategy given the opponent
Commitment devices
Changes the game so both players have an obvious choice to pick
Zero-sum games
One players gain is another players loss (i.e. football)
Variable sum game
total play off depends on the other player’s outcomes (i.e. prisoners dilemma)
Stage game
Where players choose their outcomes simultaneously
A coordination game
There are 2 pairs of fixed actions which constitute the best outcome
A Pareto coordination game
Where there is one fixed action which constitutes to the best mutual response for all
Stag hunt coordination game
Similar to Pareto coordination except there is a low risk option if you do not trust your opponent
Backward induction
To find the Nash equilibrium of a sequential game you may have to work backwards, the equilibrium obtained is the sub-game perfect (nash) equilibrium
Pareto Efficiency
When there is no other outcome with an allocation that makes someone better off without making someone worse off
Battle of the sexes coordination game
Where each player has a different preferred coordination outcome
Miscoordination
When both players coordinate on a worse equilibrium
Coordination failure
When players each choose different strategies
