Game theory Flashcards
What is the aim of game theory?
To try and predict actions and find rational ways to act, and why deviations from this may happen.
define a nash equilibrium
each player plays their best strategy given others’ plays.
what is the difference between strict and weak dominance?
strict dominance always has higher payoffs, weak has higher or equal payoffs
what does the battle of the sexes form look like?
1,3 0,0
0,0 3,1
how do you solve the potential of getting to a 0,0 outcome in battle of the sexes?
need to communicate or play non-sequentially but both players will want to play first. can therefore randomise strategies to make other player indifferent.
what sort of equilibrium does mixed strategies result in?
weakly dominating
if there’s a lottery that costs £10 to enter with a prize of £30 split between the entrants, how many people will enter in equilibrium?
2 people playing, 3 people playing.
what is Harsanyi’s argument for mixed strategies?
if players play pure strategies but are uncertain about each others’ payoffs they will seem as if they’re randomising, so mixed strat.s is relevant even if you don’t believe it’s human nature to randomise.
what is the main criticism against mixed strategies?
if players are indifferent what motivates them to choose exact probabilities that make players indifferent?
define mixed strategies
players randomise over time to achieve the best response to other players.
