ECON-2006EG Study Guide - Quiz Guide: Nash Equilibrium, Oskar Morgenstern, Quentin Crisp
7 Mar 2021
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Interdependence, decision making and the theory of games. It"s cheaper" quentin crisp: we use game theory" to analyse the problems of interdependence in daily decision making theory of games and economic behavior" from john von neumann and. Nash equilibrium = any combination of strategies in which each player"s strategy is his or her best choice, given the other player"s strategies (also works if only one player has a dominant strategy) The prisoner"s dilemma prisoner"s dilemma = a game in which each player has a dominant strategy and, when each player plays it, the resulting payoffs are smaller for each than if each had played a dominated strategy. Games in which timing matters: payoff matrix is replaced with a decision tree. Needs to pass the cost-benefit test credible promise = a promise that is in the interests of the promisor to keep when the time comes to act.
