Game Theory Our discussion comes from Bierman, H. Scott and Luis Fernandez. 1998. Game Theory with Economic Applications. 2 nd ed. Addison-Wesley.
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Bierman, H. Scott and Luis Fernandez. 1998. Game Theory with Economic Applications. 2nd ed. Addison-Wesley.
1. Set of Players.
2. Order of Play.
3. Description of the information available to any player at any point during the game.
4. Set of actions available to each player when making a decision.
5. Outcomes that result from every possible sequence of actions by the players.
6. A payoff from the outcomes.
7. Strategic situations with the above elements is considered to be well defined.
1. Players are decision-makers.
2. Nature is a special type of player. Nature chooses
actions according to fixed probabilities.
3. Strategic players are assumed to be rational decision-makers.
Confess Don’t Confess
Confess 2 years, 2 years 0 years, 10 years
Don’t Confess 10 year, 0 years 5 years, 5 years
High 40,40 100, 10
Low 10, 100 60,60
of what the chair wants.