Lecture 19 Flashcards
Three characteristics of strategic games
(1) 2+ players trying to maximize own payoffs
(2) Interdependent payoffs (either constant sum or variable sum - where pie size changes)
(3) Well-defined rules of play
Vary in simplicity, options, participants, information, payoffs
Zero sum
What one person gains, the other person loses. Constant some.
Simultaneous & Blind Games
Each person has a role, and A and B play simultaneously. Blind - neither player knows what the other will do. Ex. Rock paper scissors. Battle of the Sexes, Prisoner’s Dilemma, Stag Hunt Game
Prisoner’s Dilemma Strategy
Individually rational choice is to defect, but collectively rational choice is to cooperate. Normative in single trial is to defect. However people may cooperate due to lack of thought, altruism, relationship concerns, reputation concerns. If playing repeatedly, should be tit-for-tat, where cooperation is the first move. This allows opponent to figure out - firm yet nice.
Pure and impure altruism
May influence cooperation. Pure altruism is taking pleasure in others’ pleasure. Impure is getting pleasure from doing the right thing.
Game theory decision principles
(1) Look for and use a dominant strategy, a strategy where you do better with it than any other strategy, regardless of what the other player does. For prisoner’s dilemma, better to defect. For stag hunt, no dominant strategy (better hunting stags if partner hunts stags, but better hunting hares if partner hunts hares) - columns and rows (#,#) - must find out
(2) Assume other player is rational and respond optimally to expected actions. See if other person has a dominant strategy or there are any assumptions that can be made about player or situation
Backward induction
What if you guess what the other player will do but the other person guesses what you will do based on what he or she does? How far back do you need to go? Interdependence of choices
What will I do? = 0 steps
What should I do based on what she is expected to do? = 1 step back
…etc
