1 / 5

Economics 202: Intermediate Microeconomic Theory

Economics 202: Intermediate Microeconomic Theory. HW #6 on website. Due Tuesday. Second test covers up through today’s material, and will be “pseudo-cumulative” (to be explained). Game Theory. “The Dating Game” Multiple Nash equilibria Nash equilibrium concept loses appeal “Copycat Game”

nevada-mcfarland
Download Presentation

Economics 202: Intermediate Microeconomic Theory

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Economics 202: Intermediate Microeconomic Theory • HW #6 on website. Due Tuesday. • Second test covers up through today’s material, and will be “pseudo-cumulative” (to be explained).

  2. Game Theory • “The Dating Game” • Multiple Nash equilibria • Nash equilibrium concept loses appeal • “Copycat Game” • No Nash equilibrium • Players want to outguess the other • Introduce mixed strategies (in contrast to pure strategies) Information Complete Incomplete Bayesian Nash Equilibrium Nash Equilibrium Static Timing Backward Induction Perfect Bayesian Equilibrium Dynamic Pat Red White Steak Chris Dating Game • Mixed Strategy = a probability distribution over some or all of a player’s pure strategies • Mixed strategies can add Nash equilbria • Result: Any game with finite # players who have finite # pure strategies has a Nash equilibrium (possibly utilizing mixed strategies) Chicken Jill Inside Outside Inside Jack Copycat Game Outside

  3. Game Theory • Dynamic, complete 2-player sequential move game • Order of play • Player 1 chooses action a1 • Player 2 observes a1 and then chooses a2 • Players receive their payoffs U1(a1,a2) & U2(a1,a2) • Examples • Stackelberg-version of Cournot duopoly • Trust Game -- equilibrium? Information Complete Incomplete Bayesian Nash Equilibrium Nash Equilibrium Static Timing Backward Induction Perfect Bayesian Equilibrium Dynamic Player 2 Honor Betray Trust Player 1 Trust Game (normal form) • Dynamic, simultaneous move (or infinite horizon) games requires an extension of backward induction called subgame-perfect Nash equilibrium Not trust Player 1 Trust Game (extensive form) Not trust Trust Player 2 0,0 Honor Betray 1,1 -1, 2

  4. B Loudly Softly Loudly 7, 5 5, 4 A Softly 6, 4 6, 3 Game Theory • “The Dormitory Game” • Write extensive form if simultaneous game • Write extensive & normal forms if A chooses first

  5. Game Theory • “Vote by Alternating Veto” • Player 1 prefers X to Y to X, Player 2 prefers Z to Y to X • Find Nash equilibria and subgame perfect Nash equilbria

More Related