Class_4(2)

Class_4(2) - Econ171Introductionto GameTheory Lecture 4...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ -171 Introduction to  Game Theory Lecture 4
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Outline From previous class: Learned about NE and MSNE . Saw how to calculate MSNE . Today: An example finding a MSNE . Interpretation of NE and MSNE . Comment on “strategic tensions”. Begin applications of NE . Tomorrow: Continue applications
Background image of page 2
Finding MSNE Find the MSNE of the following game which has no pure strategy NE .
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Finding MSNE Let p be the probability of P1 playing U and q be the probability of P2 playing L. Remember, in order for a mixed strategy to be a best response, the probabilities must make the EU from their strategies equal.
Background image of page 4
Finding MSNE Find q a) 1/4 b) 2/7 c) 3/4 d) 5/7 e) ?
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Finding MSNE Find p a) 1/4 b) 2/7 c) 3/4 d) 5/7 e) ?
Background image of page 6
Finding MSNE The probability of outcomes (U,L) (U,R) (D,L) (D,R) occurring, given each player mixes, are (6/28), (2/28), (15/28), (5/28). P1’s expected payoff from playing the game when both players mix is 2(6/28) + 1(2/28) + 1(15/28) + 4(5/28)
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Interpreting NE Iterated Dominance is a constructive tool to analyze games because it does not assume players know the strategy choices of others (only rationality). In NE , players have beliefs about what the other is doing and those beliefs are self-fulfilling, or consistent with each other- stricter solution concept. Where do beliefs about what other players do come from?
Background image of page 8
Sources of NE 1. Play Prescription : Some outside party proposes a ‘prescription’ of how to play the game. The prescription is stable, i.e. no player has an incentive to deviate if she thinks others are following the prescription thus a NE . 2.
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/03/2011 for the course ASAM 2 taught by Professor Staff during the Spring '10 term at UCSB.

Page1 / 27

Class_4(2) - Econ171Introductionto GameTheory Lecture 4...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online