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Game Theory (Key Concepts (Cooperative outcome (An equilibrium where the…
Game Theory
Key Concepts
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Dominant Strategy
A dominant strategy is one where a single strategy is best for a player regardless of what strategy other players in the game decide to use.
Nash Equilibrium
Any situation where all participants in a game are pursuing their best possible strategy given the strategy of all the other participants
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Introduction
Game theory studies settings where multiple parties (agents)
each have
– different preferences (utility functions),
– different actions that they can take
Each agent’s utility (potentially) depends on all agents’
actions
– What is optimal for one agent depends on what other agents do
• Very circular
Game theory studies how agents can rationally form beliefs
over what other agents will do, and (hence) how agents
should act