ECON-2006EG Study Guide - Quiz Guide: Game Theory, Best Response, Backward Induction
7 Mar 2021
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Week 5 - chapter 13: game theory & strategic plan. Key elements of a game: 1) players 2) strategies 3) payoffs. Strategies: compromise a complete plan describing how a player will act. Payoff matrix: represents the payoffs for each action players take, one player"s actions in rows (+ first number listed in cell) & other player"s actions in columns (+second number listed in cell) cells where action intersects give payoffs. Simultaneously move games: games where players pick their actions at the same time without knowing other person"s choice, but both players know entire payoff matrix = know payoff for both players. Best responses: first step in figuring out how to play any game is to put yourself in the shoes of the other player. Dominant strategy: one best response to every possible strategy of the other player(s) Dominant strategy equilibrium: combination of strategies where each strategy in a game is a dominant strategy.
