1/22/20091Homework Due Friday 4:15PMHand homework in to your GSI during discussion sectionORTurn in homework to the specially marked box outside Lorch Hall 109 by 4:15PMToday: Chapter 4, Next Week: Chapter 5Homework Due Friday 4:15PMDixit & Skeath, Chapter 3, Question 9, Part c)Should read: “Explain intuitively why the difference between the outcomes in Part a) and Part b) arises.”Finding Nash EquilibriaWe’d like a method for finding NEPlayer 21234A57641112822NE occur where Best Responses intersect, i.e. in cells with two circlesPlayer 15 , 76 , 411 , 128 , 22B2 , 615 , 31 , 07 , 2C3 , 92 , 619 , 96 , 5D0 , 00 , 19 , 1717 , 12Nash Equilibrium PhilosophyEquilibrium as a point where there are No Incentives for ChangeHow to talk of “change” and “best response” in a game that is only played once?Think of Nash Equilibrium as system of beliefs about what others will dobeliefs are subjectivebeliefs are correct in equilibriumaction that is optimal given beliefsExample – Attributed to A.W. TuckerTwo Prisoner’s brought in for interrogationThey are put in separate roomsClyde BarrowMumFinkKnown as “The Prisoner’s Dilemma”Bonnie ParkerMum2 , 20 , 3Fink3 , 01, 1Bonnie & Clyde (ca 1933)
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