Revelation game game theory

# Revelation game game theory - Revelation game SB Believe...

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Revelation game SB Believe Don’t believe Reveal 3,4 2 Don’t reveal 4,2 2,3 There is a pareto superior BUT IT IS NOT BEST OUTCOME FOR BOTH PLAYERS Lala = nash equilibrium ( stable) Lala = pareto superior Lala = pareto optimal So (3,4) is pareto 3,4 and 4,2 are the 2 non myopic pareto equilibriums meaning if you start there would either player move? The answer is no. the progression let us say started Only 3,4 is the superior to the nash equilibrium One player has a dominant strategy ( SB) so (P) will anticipate this It is like the prisoners dilemma where 2,2 is the nash equilibrium But in prisoners dilemma due to the symmetry both have dominant strategies But where the games agree is that the unique nash equilibrium (in either game ) are inferior to the pareto superior outcome on the upper left Prisoners player is different because you are stuck under TOM, it is the only game on the 72 unique 2*2 games where you will never move from the pareto inferior position. Because if they did let us say player a moved ( does not matter

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Revelation game game theory - Revelation game SB Believe...

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