m5l3 - UGBA 10 Module 5 Lecture 3 A Game Column Player Left...

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Unformatted text preview: UGBA 10 Module 5 Lecture 3: April 28, 2008 A Game Column Player Left Right Row Player Up-1 10 Down 10-1 3 3 Dominant Strategies • A dominant strategy is one that is best to play no matter what you think your opponent will do. • Obser ve ____ is a dominant strategy for row. • Obser ve ____ is a dominant strategy for column. Pr isoners’ Dilemma A > B C > D A < D Column Player A > B & C > D ⇒ Defect dominant strategy Defect Cooperat e Row Player Defect A A B C Cooperat e C B D D Example of Pr isoners’ Dilemmas • Adver tising games (adver tise = defect) • Ar ms races (build up = defect) • Rat racing (working too hard = defect) • Opening stores/franchises (too many = defect) $10 Auction • Rules: • I f only one bidder, he or she pays bid and receives $10. • I f two or more bidders, then • Highest bidder gets $10; and • Second highest bidder pays bid. • Bid increment = $1. Rule #1 • Understand the strategic situation you face....
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m5l3 - UGBA 10 Module 5 Lecture 3 A Game Column Player Left...

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