Game Theory & Strategic Behaviour

Question 1

what is a dominant strategy

Answer 1

a strategy that gives the highest payoff regardless of what the other player does

Question 2

what is a Nash equilibrium

Answer 2

a set of strategies where no player has an incentive to deviate if others stick of their strategies

Question 3

what is a grim trigger strategy

Answer 3

if a player cheats, the other punishes them forever by choosing non-cooperation

Question 4

what condition must hold for grim trigger to work

Answer 4

future rewards must outweigh short term gains from cheating

Question 5

what characterises a pure strategy equilibrium in a coordination game

Answer 5

both players are better off choosing the same strategy

Question 6

what does an indifference point mean in a mixed strategy equilibrium

Answer 6

the player is indifferent between options at that probability

Question 7

what is a non-credible threat

Answer 7

a strategy a player wouldn’t rationally follow if the situation occurred

Question 8

how is expected payoff calculated

Answer 8

by weighting payoff of each outcome by their probability