ECON 200 Chapter Notes - Chapter 9: Nash Equilibrium, Strategic Dominance, Sequential Game
25 Feb 2015
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Document Summary
Game- a situation involving at least two people that requires those involved to. Game theory- the study of how people behave strategically under different circumstances. Behaving strategically- acting to achieve a goal by anticipating the interplay between your own and others" decisions. Rules- actions that are allowed in a game. Strategies- plans of action that players follow to achieve their goals. Payoffs- rewards that come from particular actions. Prisoners" dilemma- a game in which two people make rational choices that lead to a less-than-ideal result for both. Dominant strategy- a strategy that is the best one for a player to follow no matter what strategy other players choose. Nash equilibrium- an equilibrium reached when all players choose the best strategy they can, given the choices of all other players. Point in the game where no player has an incentive to change his or her strategy, given what the other players are doing.
