23_GameTheoryFundamentals_ToPost

23_GameTheoryFundamentals_ToPost - ECON 410 Game Theory...

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Unformatted text preview: ECON 410 Game Theory Fundamentals In terms of game theory, we might say the universe is so constituted as to maximize play. The best games are not those in which all goes smoothly and steadily towards a certain conclusion, but those in which the outcome is always in doubt. Similarly, the geometry of life is designed to keep us at the point of maximum tension between certainty and uncertainty, order and choas. Every important call is a close one. We survive and evolve by the skin of our teeth. We really wouldnt want it any other way. George Leonard 2 Class 23 - Game Theory Fundamentals 3 Class 23 - Game Theory Fundamentals 4 Class 23 - Game Theory Fundamentals http://www.youtube.com/watch?v=p3Uos2fzIJ 0 (stop at 2:50) Group-Clicker Question (P): Whats about to happen? 1 2 3 4 0 % 0 % 0 % 0 % 1. Male splits, Female steals 2. Female splits, Male steals 3. Both split 4. Both steal Group-Clicker Question (P): Whats about to happen? 1 2 3 4 5 6 7 8 0 % 0 % 0 % 0 % 0 % 0 % 0 % 0 % 1. I am a female and I think Male splits, Female steals 2. I am a female and I think Female splits, Male steals 3. I am a female and I think Both split 4. I am a female and I think Both steal 5. I am a male and I think Male splits, Female steals 6. I am a male and I think Female splits, Male steals 7. I am a male and I think Both split 8. I am a male and I think Both 7 Class 23 - Game Theory Fundamentals http://www.youtube.com/watch?v=p3Uos2fzIJ 0 (start at 2:50) 8 Class 23 - Game Theory Fundamentals Game Theory The study of strategic interactions 9 Class 23 - Game Theory Fundamentals 10 Class 23 - Game Theory Fundamentals 11 Class 23 - Game Theory Fundamentals 12 Class 23 - Game Theory Fundamentals Normal Form Game 1. Set of players : Who is playing 2. Strategy s pace of each player: How they can play 3. Payoff each player receives given any s trategy profile: What they will win given each combination of their strategy and their opponents strategies. Group-Clicker Question (P): Everyone is going to click a number between 1 and 9, trying to guess the number that is closest to 2/3 of the class average. For instance, if students click 2, 3, 6, and 9, the average will be (2+3+6+9)/4=5 and the winner will be the student who clicked 3, since it is closest to (2/3)*5=3.33. 1 2 3 4 5 6 7 8 9 0% 0% 0% 0% 0% 0% 0% 0% 0% 1. 1 2. 2 3. 3 4. 4 5. 5 6. 6 7. 7 8. 8 9. 9 14 Class 23 - Game Theory Fundamentals Normal Form Game 1. Set of players : Every student in the class. 2. Strategy s pace of each player: {1, 2, 3, 4, 5, 6, 7, 8, 9} 3. Payoff each player receives given any s trategy profile: Assuming the winning students receive $1 (which is a bad assumption), For every student, payoffs are $1 if your number is closest to 2/3 the average $0 otherwise Group-Clicker Question (P): Consider a game of Rock/Paper/Scissors between two people in which the winner receives $1 from the loser and no money is exchanged in the case of a tie. no money is exchanged in the case of a tie....
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23_GameTheoryFundamentals_ToPost - ECON 410 Game Theory...

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