1/22/2009
1
Homework Due Friday 4:15PM
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Hand homework in to your GSI during
discussion section
OR
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Turn in homework to the specially marked
box outside Lorch Hall 109 by 4:15PM
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Today: Chapter 4, Next Week: Chapter 5
Homework Due Friday 4:15PM
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Dixit & Skeath, Chapter 3, Question 9, Part c)
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Should read: “Explain intuitively why the
difference between the outcomes in Part a)
and Part b) arises.”
Finding Nash Equilibria
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We’d like a method for finding NE
Player 2
1234
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NE occur where Best Responses intersect,
i.e. in cells with two circles
Player 1
A
5 , 7
6 , 4
11 , 12
8 , 22
B
2 , 6
15 , 3
1 , 0
7 , 2
C
3 , 9
2 , 6
19 , 9
6 , 5
D
0 , 0
0 , 1
9 , 17
17 , 12
Nash Equilibrium Philosophy
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Equilibrium as a point where there are No
Incentives for Change
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How to talk of “change” and “best response”
in a game that is only played once?
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Think of Nash Equilibrium as
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system of beliefs about what others will do
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beliefs are subjective
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beliefs are correct in equilibrium
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action that is optimal given beliefs
Example – Attributed to A.W. Tucker
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Two Prisoner’s brought in for interrogation
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They are put in separate rooms
Clyde Barrow
Mum
Fink
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Known as “The Prisoner’s Dilemma”
Bonnie
Parker
Mum
2 , 2
0 , 3
Fink
3 , 0
1, 1
Bonnie & Clyde (ca 1933)