Term 2 week 9 Flashcards
1
Q
What is a dynamic game of incomplete information?
A
-Players move sequentially but have different information along the way.
2
Q
What is a perfect bayes nash equilbirum?
A
-Must not only be equilibrium in entire game but must also be a perfect bayes nash equilibrium in every sub game
3
Q
What is an information set?
A
Differentiated per player
4
Q
What are the 3 requirements for Perfect baysian equilibrium
A
- player 2 has a belief to where they are in the information set. This belief is pinned down by a probability distribution
-Players must be sequentially rational/ make optimal
-At information sets on the equilibrium path , beliefs are determined by Bayes rule
5
Q
Why can perfect baysian equilbrium remove non-credible threats:
A
-As it means that players will have a belief to their information set and they will act optimally
