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Lecture 22 - Apr 15 - Intro to Game Theory, Solving a Game, Nash Equilibrium

Lecture 22 - Apr 15 - Intro to Game Theory, Solving a Game, Nash Equilibrium

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Economics 100A Lecture #22: Thursday, April 15 1) Introduction to game theory 2) Solving a game 3) Nash equilibrium
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(1) Game theory The study of social interaction among two or more rational decision makers, each making choices that have consequences for the others as well as themselves. Examples of “Games” scissors-paper-stone, tic-tac-toe, chess, Monopoly ® , Texas hold ‘em, “chicken” nuclear or conventional warfare, political campaigns price wars, advertising campaigns, technology races, M & A
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Key properties of games noncooperative : players cannot make binding agreements to take certain actions can’t trust opponent strategic interdependence : one player’s payoff from choosing a strategy depends on what other players do circularity : to select her best strategy, a player must know what other players will do, but they, in turn, are in this same situation John Von Neumann Oscar Morgenstern
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