ECON 306 Lecture 1: Econ306 Best Response & Expected Utility

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21 Jan 2015
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The interesting thing about this game, for our purposes, is that it features no dominated strategies. This means we can"t utilise the method of iterated deletion when trying to solve it. Well, we can appeal to the notion of best response. In other words, we can work out which strategies are the best responses for one player to the strategies of the other player. A strategy is a best response if it yields the highest possible payoff for one player, holding the other player"s choice of strategy fixed. Looking at the game matrix above, and analysing it from the perspective of player 1, we can say the following: U is a best response to l. in other words, if player 2 chooses l, then player 1 does best by choosing u in response. M is a best response to r. in other words, if player 2 chooses r, then player 1 does best by choosing m in response.

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