NashNotes - Player A Cooperate 2000 1500 4000 50 Not...

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Step by step guide on how to find a Nash Equilibrium or Equilibria Step 1. Look at the payoff matrix and figure out whose payoff’s are whose: Player B Cooperate Not Cooperate Player A Cooperate 2000 (B) 1500 (A) 4000 (B) 50 (A) Not Cooperate 100 (B) 2000 (A) 101 (B) 60 (A) Step 2. Figure out Player A’s best response to all of player B’s actions Player B Cooperate Not Cooperate Player A Cooperate 2000 1500 4000 50 Not Cooperate 100 2000 101 60 Since 2000 > 1500 and since 60 > 50
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Step 3. Figure out Player B’s best response to all of player A’s actions Player B Cooperate Not Cooperate
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Unformatted text preview: Player A Cooperate 2000 1500 4000 50 Not Cooperate 100 2000 101 60 Since 4000 > 2000 and since 101 > 100 Step 4. A Nash equilibrium exists where Player B’s best response is the same as Player A’s best response Player B Cooperate Not Cooperate Player A Cooperate 2000 1500 4000 50 Not Cooperate 100 2000 101 60 Find the Nash equilibrium or Nash equilibria Example 1 Player B Cooperate Not Cooperate Player A Cooperate 6000 2500 4000 50 Not Cooperate 100 2000 101 60 Example 2 Player B Cooperate Not Cooperate Player A Cooperate 2000 1500 4000 50 Not Cooperate 105 2000 101 60...
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This note was uploaded on 07/23/2011 for the course MGMT 3052 taught by Professor S during the Spring '11 term at University of the West Indies at St. Augustine.

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NashNotes - Player A Cooperate 2000 1500 4000 50 Not...

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