PS 367 Midterm 1 study guide

# PS 367 Midterm 1 study guide - Each answer you give should...

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f out its signi cance. Why is it important? What role does the term play in our f understanding of war and peace? If the term refers to a person, event or agreement, what is its signi cance or what concept does it illustrate? f 1. Expected utility Expected utility is the amount that you will gain while also considering the costs involved. Based on uncertain outcomes actors choose the better preference or payout. One wants the highest possible expected value. When considering International Relations expected utility is important because it helps one choose whether to engage in war, conflict, etc. Every action has a certain ‘utility’. You will gain things but there will also be costs. And then you need In game theory the expected utility hypothesis is a theory of utility in which "betting preferences" of people with regard to uncertain outcomes are represented by a function of the payouts (whether in money or other goods), the probabilities of occurrence, risk aversion , and the different utility of the same payout to people with different assets or personal preferences. In the presence of risky outcomes, a decision maker could use the expected value criterion as a rule of choice: higher expected value investments are simply the preferred ones. For example, suppose there is a gamble in which the probability of getting a \$100 payment is 1 in 80 and the alternative, and far more likely, outcome, is getting nothing. Then the expected value of this gamble is \$1.25. Given the choice between this gamble and a guaranteed payment of \$1, by this simple expected value theory people would choose the \$100-or-nothing gamble. However, under expected utility theory, some people would be risk averse enough to prefer the sure thing, even though it has a lower expected value, while other less risk averse people would still choose the riskier, higher-mean gamble. 2. Strategic uncertainty Strategic uncertainty describes the situation many actors find themselves in when engaging with another actor(s). Your move depends on your opponents move. This means that _________ 3. Mixed-motive situations Mixed-motive situations are those where two or more parties are faced with a conflict between the motives to cooperate and to compete with each other. It is most commonly used in two-person bargaining. It can be related to prisoner’s dilemma when two actors do not have the same belief system and therefore must select the outcome that gives them the most optimal payout. It is important because it is common for actors to not agree and must work and bargain with each other to reach a comparable solution. 4. Distributional con icts

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## This note was uploaded on 11/21/2011 for the course POLI SCI 367 taught by Professor Favretto during the Spring '11 term at University of Wisconsin.

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PS 367 Midterm 1 study guide - Each answer you give should...

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