Nash Equilibrium (L16)

Question 1

dominant strategy equilbrium

Answer 1

both players choose their dominant strategy

Question 2

second price auction

Answer 2

you pay the second highest bid
bids denoted by bi
valuation by vi
v-b gives utility, if you don’t win then utility is 0

Question 3

best replies

Answer 3

when there is no dominant strategy, then when the players will use the other players choice to make their decision (highest payoff based on the other player)

Question 4

nash equilibrium

Answer 4

no player can do better by switching to a different option (pareto basically)
best replies give nash

Question 5

best replies using inverse demand

Answer 5

p(y1+y2)y1-c, differentiate with respect to y1 then y2 to sub back into function