L11 Econ 1011 Lecture 10: Games and Economic Strategy

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oliveleopard31

18 Aug 2016

School

WUSTL

Department

University College - Economics

Course

L11 Econ 1011

Professor

Bandyopadhyay Sudeshna

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Document Summary

Three basic elements: the players, the list of possible actions (or strategies) available to each player, and the payoffs the players receive for each possible combination of strategies. Payoff matrix: a table that describes the payoffs in a game for each possible combination of strategies. Dominant strategy: one that yields a higher payoff no matter what the other players in a game choose. Dominated strategy: any other strategy available to a played who has a dominant strategy. Nash equilibrium: any combination of strategy choices in which each player"s choice is his or her best choice, given the other players" choices: in this cell, the player will not want to change strategy. Prisoner"s dilemma: a game in which each player has a dominant strategy, and when each plays it, the resulting payoffs are smaller than if each had played a dominated strategy. Continuously reduce price to win more market.

Related Questions

4. Game theory terminology

Select the term that best describes each definition listed in the following table.

Definition	Nash Equilibrium	Dominant Strategy	Collusion	Tit-for-tat Strategy	Payoff Matrix	Prisoners' Dilemma
A player's best choice, if it exists, regardless of his or her opponent's strategy
A set of strategies (one for each player) in which each player's strategy is the best option for that player, given the chosen strategy of the player's opponents
A case in which individually rational behavior leads to a jointly inefficient outcome
A visual representation of a game showing all possible strategies for each player and all potential outcomes and payoffs

periwinklebuffalo937

Suppose that two players are playing the following game. Player A can choose either Top or Bottom, and Player B can choose either Left or Right. The payoffs are given in the following table:

Where the number on the left is the payoff to Player A, and the number on the right is the payoff to Player B.

A) (1 point) Does player A have a dominant strategy, and if so what is it?

B) (1 point) Does player B have a dominant strategy and if so what is it?

C) (4 points) For each of the following say true if the strategy combination is a Nash equilibrium, and false if it is not a Nash equilibrium:

i) Player A plays Top and Player B plays Left

ii) Player A plays Bottom and Player B plays Left

iii) Player A plays Top and Player B plays Right

iv) Player A plays Bottom and Player B plays Right

D) (2 points) If each player plays her maximin strategy what will be the outcome of the game? (Give your answer in terms of the strategies each player chooses)

coffeemarten373

1. (10 total points)

Suppose that two players are playing the following game. Player A can choose either Top or Bottom, and Player B can choose either Left or Right. The payoffs are given in the following table:

graycod593

L11 Econ 1011 Lecture 10: Games and Economic Strategy

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