EC260 Chapter Notes - Chapter 10: Extensive-Form Game, Subgame, Subgame Perfect Equilibrium
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Playoffs to plays are the profits or losses resulting from strategies. Simultaneous-move game: each player makes decisions with knowledge of other players" decisions. Sequential-move game: one player observes its rival"s move prior to selecting a strategy. Repeated game: game is played more than once; either a finite or infinite number of interactions. Set of players, where n is a finite number. Each player strategy set or feasible actions consist of a finite number of strategies: player 1"s strategies are, player 2"s strategies are. Payoffs: player 1"s payoff, player 2"s payoff: Suppose 1 thinks 2 will choose a, then 1 should choose a player 1"s best response to a is a. A is player 1"s dominant strategy since better off choosing a regardless of what 2 chooses. Dominant strategy: strategy resulting in the highest payoff regardless of the opponent"s action. If a is a dominant strategy for player 1 in the previous game, then:
