ECON 2300 Lecture Notes - Nash Equilibrium, Strategic Dominance, Grim Trigger
Document Summary
Econ 2300 summer 2011 mark melatos. Topic 8 game theory july 7. An agent has to take into account how its opponents will respond to his/her action: i. e. your opponent"s expected response determines what action you take. There are 2 types of strategic game: cooperative players (agents) negotiate binding contracts that allow them to plan joint strategies, non-cooperative when negotiation and enforcement of a binding contract are not possible. Components of game: players (only 2 for us), a set of actions (strategies) for each player, a way of determining the payoffs to each player from all possible outcomes of the game. We make 2 important assumptions: players are rational they always seek to maximise their own playoffs, plays have full information about the game. Each knows what the payoff matrix looks like. Games can be played in one of two ways: simultaneous movement players move at the same time and do not observe their opponent"s action.
