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Lecture 16

# Lecture 16 - Lecture 16 1 Mixed Strategy Equilibrium a...

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Lecture 16 1. Mixed Strategy Equilibrium: a. Expected Payoff for making USDR indifferent. i. EP USDR  = P(0.5) + (1-p)(0) = P(0) + (1-p)(1) ii. Solve for p b. Expected payoff for making Japan indifferent i. EP Japan  = Q(1) + (1-Q)(0) = Q(0) + (1-q)(0.5) ii. Q probability that Japan will build in japan c. The full equilibrium is when the values for both p and q are solved for . d. (p = 2/3, q = 1/3) e. Neither players have incentives to change strategy, Broader definitions of equilibrium  where the probability is zero or one. 2. Preferences a. Chapter 9 b. New mathematical approach. c. Neorealists thought about it very superficially in the idea of a national interest. i. Is there a thing as national interest ii. Not very easy to define, iii. What turns up as the national interest iv. National Preference d. Rational Choice Theory:  Preference is a rank ordering that indicates whether you like  something more, less or same as something else.

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Lecture 16 - Lecture 16 1 Mixed Strategy Equilibrium a...

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