Extensive form games This lecture provides a general introduction to the course, explains the extensive form representation of games and introduces you to Comlabgames , software for designing, playing and analyzing experimental games. Preamble
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This lecture provides a general introduction to the course, explains the extensive form representation of games and introduces you to Comlabgames, software for designing, playing and analyzing experimental games.
Being “strategic” means intelligently seeking your own goals in situations that involve other parties who do not share your goals.
In this school “corporate” typically refers to a business entity, for example a corporation owned by shareholders whose interests in the firm are exclusively financial.
And “management” refers to the kind of job you will enter upon graduating from here.
A strategic situation exists when the actions of one person directly affects the payoff of someone else.
Game theory is the study of such interactions among players.
A premise of game theory is that each player pursues his or her respective objectives taking that interdependence into account.
There are 2 projects : the first project is worth 35 percent and the second project is worth 65 percent.
See due dates in the syllabus. Each project consists of
Projects may undertaken individually, or in groups of two to four. Each member of a group will receive the same mark.
To introduce you to experimental methods, let us conduct some experiments designed using the extensive form game module on the comlabgames web site.
Next lecture we will show how translate a case into an extensive form game.
It is more costly to undertake an audit than to only check for irregularities, and if no fraud was committed the extra tax revenue and penalties garnered is the same.
Undetected fraud is more lucrative to the taxpayer then committing some accounting irregularities.
Truthful reporting and passing over use up no resources, merely redistributing wealth from the taxpayer to the IRS.
Who are the players?
What are their potential moves?
What is their information?
How do they value the outcomes?
Each node designates whose turn it is. It could be a player or nature. The initial node shows how the game starts, while terminal nodes end the game.
A branch join two nodes to each other. Branches display the possible choices for the player who should move, and also the possible random outcomes of nature’s moves.
Tracing a path from the initial node to a terminal node is called a history. A history is uniquely identified by its terminal node.
Each non-terminal decision node is associated with an information set.
If a decision node is not connected to a dotted line, the player assigned to the node knows the partial history.
If two nodes are joined by a dotted line, they belong to the same information set, and the two sets of branches emanating from them, which define the player’s choice set, must be identical.
A player cannot distinguish between partial histories leading to nodes that belong to the same information set.