Lesson 33: Comments on MSNEOutcomes: all four things may happen4/22 of the time – cops on beat, robbers active7/22 of the time –cops on beat, robbers home4/22 – cops in donut shop, robbers active7/22 ‐‐ cop eating donuts, robbers at home.Equilibrium pay‐offs are expected pay‐offsEUC(MSNE) = 4/22 (2) + 4/22(‐5) + 7/22 (1) + 7/22 (5) = (‐12 + 42)/22 = 15/11EUR(MSNE)= 4/22 (‐5) + 4/22(5) + 7/22 (0) + 7/22 (0) = 0Tricky points1. True randomness versus alternation.Can’t have cops on beat every other day –robbers do better by adapting to their pattern. Need to have real randomness. (Spinwheel)‐ Auditors/tax payers‐ Teacher/student2. Ex ante versus ex post regrets. Ex post someone will have regrets, but ex ante
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