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Froeb15 - Froeb Chapter 15 15 Strategic Games Summary of...

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1 Froeb Chapter 15 Strategic Games Summary of main points A Nash equilibrium is a pair of strategies, one for each player, in which each strategy is a best response against the other. When players act rationally, optimally, and in their own self- interest, it’s possible to compute the likely outcomes (equilibria) of games. By studying games, we learn not only where our strategies are likely to take us, but also how to modify the rules of the game to our own advantage. Equilibria of sequential games, where players take turns moving, are influenced by who moves first (a potential fi rst- mover advantage, or disadvantage), and who can commit to a future course of action. Credible commitments are difficult to make because they require that players threaten to act in an unprintable way—against their self-interest. In simultaneous-move games, players move at the same time.
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