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slide28-nov9 - ECON 401 Game theory Rationalizable...

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ECON 401: Game theory: Rationalizable Strategies Siyang Xiong Rice University November 11, 2011 Xiong (Rice University) ECON 401 November 11, 2011 1 / 12
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Rationalizable Strategies solution concepts (weakly and strictly) dominant strategies; (weakly and strictly) dominated strategies, Nash Equilibrium; a new solution concept: rationalizable strategies. Xiong (Rice University) ECON 401 November 11, 2011 2 / 12
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Rationalizable Strategies prisoner°s dilemma: don°t confess confess don°t confess ° 2 , ° 2 ° 10 , ° 1 confess ° 1 , ° 10 ° 5 , ° 5 "confess" is a dominant strategy for each player; we predict that both players will play "confess". Xiong (Rice University) ECON 401 November 11, 2011 3 / 12
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Rationalizable Strategies DA°brother: don°t confess confess don°t confess 0 , ° 2 ° 10 , ° 1 confess ° 1 , ° 10 ° 5 , ° 5 player 1 no longer has a dominant strategy; player 2 still has a dominant strategy: "confess"; we predict that both players will play "confess". Xiong (Rice University) ECON 401 November 11, 2011 4 / 12
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Rationalizable Strategies D E F A -1,3 0,1 0,0 B 2,1 1,0 0,0 C 1,0 0,3 2,0
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