Please enable JavaScript.
Coggle requires JavaScript to display documents.
Week 1: Introduction. (Prisoner's Dilemma. (Strategies : a player'…
Week 1: Introduction.
Prisoner's Dilemma.
Police hold two suspects in separate cells for a crime w/ lack of evidence to convict w/o confession.
- Neither confess, both get 1yr.
- Both confess, each get 6yrs.
- If one confesses, he gets 0yr whilst other gets 9.
Players : The individuals (people, firms) who make relevant decisions.
Strategies : a player's strategy is a complete plan of action, reflecting how players should move/act in response to all possible confrontations
In Prisoner's Dilemma, it's a static one-shot game, so strategy is used more loosely. It's confess / don't confess.
Payoffs : measure of utility in a game (higher always preferred, always maximise).
-
Complete Information: all players know key attributes (their strategies and payoffs, and their opponents', and the number of opponents). They also assume all players are rational.
Common Knowledge : everyone knows that fact, and everyone knows that everyone knows. The principle that implies players putting themselves in another's shoes, think what they'll do and act accordingly.
Game Theory.
Decision-Making when two people's actions are mutually interdependent (one's outcome relies on what the other does).
-
Examples : Football (Penalties), Chess (ordered movements), Business (cartel - regulating of supply to manipulate prices / trust others?).
Examples of Absence : Robinson Crusoe (isolated individual, sole agent), Perfect Competition (individual producers/consumers small relative to large market, so no response from other businesses).
-
