Lecture2 - 1 Analyzing Games We need three things to...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1/13/2009 1 Analyzing Games ¡ We need three things to specify a game ¡ Players ¡ Possible strategies for each player ¡ Payoffs for each player over outcomes ¡ We consider a notion of equilibrium: no forces for change Analyzing Games ¡ Players have well-defined and well-behaved preferences over outcomes ¡ Each player is rational : he chooses the strategy that yields his most-preferred outcome ¡ The game is clearly and correctly specified ¡ Everything about the game is common knowledge Example – The Dictator Game ¡ Two Players: Sender and Receiver ¡ Sender is given $10 by a rich benefactor ¡ Sender can send $x to the Receiver ¡ Sender’s payoff: $(10-x) ¡ Receiver’s payoff: $x Example – The Dictator Game ¡ How I might draw out the dictator game 10 (0,10) (1, 9) (Sender’s payoff, Receiver’s payoff) SENDER 1 9 (10, 0) (9, 1) Example – The Dictator Game ¡ Not a game – just a decision problem ¡ In experiments, Senders often give significant amounts to Receivers they don’t know!!! ¡ WHY??? ¡ Senders are not rational? ¡ Senders value “fairness” as well as money ¡ $10 is insignificant, decisions are just random ¡ Senders don’t believe they are anonymous ¡ Senders have evolved to behave “fairly”...
View Full Document

{[ snackBarMessage ]}

Page1 / 4

Lecture2 - 1 Analyzing Games We need three things to...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online