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Game Theory - Coggle Diagram
Game Theory
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Nash Equilibrium
Types
Pure Strategy Nash Equiliarium
Players choose one strategy with certainty
Example: Both players choose to confess in Prisoner's
Dilemma.
Mixed Strategy Nash Equlibrium
Players randomize over strategies
Example: in Rock, Paper, Scissors, randomizing prevents predictabilty.
Application
Economics, Pricing strategies in markets
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Key Characteristics
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Each player's strategy is optimal given others strategies,
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Definition
A scenario in a game where some players maintain their strategy while no one can gain from altering theirs
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The Prisoner's Dilemma
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A classic game theory scenario known as the Prisoner's Dilemma shows how two people may not cooperate even when it is in their best interests because they are motivated to behave in their own self-interest. This can result in a Nash Equilibrium, in which neither participant selects the optimum course of action for both parties.