Principles of Game Theory. Lecture 12: Cheap Talk. Administrative. Homework due tomorrow Quiz Thursday Repeated Games – look at chapter 11 in Dixit and the end of Chp 2 in Gibbons No class Sunday, Sept 29 th ; next quiz Oct 6 (week from Sunday). Rational Irrationality.
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Lecture 12: Cheap Talk
Is it credible?
“Create fear in the mind of the enemy”
“It is essential”
“Not something a sane man would do”
“It wasn’t a practical deterrent”
“Tell the world”
For you seniors:
Why make such offers?
In preparation for next time, I want to make sure you are familiar with Bayes Theorem:
But it’s often useful to use the law of total probability:
But when there are only a couple of events (types of players, etc), we can construct a table:
where a and b are often described as the accuracy of the test:
1 – Rate of True Positives
Rate of True Positives
0.024 × 0.0076
1 – Rate of True Negatives
Says NOT HIV+
0.0002 + 0.9874
P(HIV|“Positive”) = 0.0074/0.0124 = 0.5992