Game theory 1

Game theory

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Game Theory

Game theory is studying strategic situations

• Perfect competition, Monopolists (take the demand)

• Game theory: main consideration is the pay-off, game theory cannot help for making decision until payoff is displays

• Strictly dominate: no matter how you chose, I would get the better off through your choice (the pay-off is strictly greater than another regardless of what others do)

• Lesson 1: do not play a strictly dominated strategy
  o Explain more… Even state I played a dominated strategy, I do better in every case. I do better for what I have done.

• Lesson 2: rational choice can lead to outcome that bad outcome(suck)
  o indigent angle: possible pay-off. the one you get add up the total you pay-off (due to your partner make you get that pay-off)
  o coordination problem: pay-off does matter

• Lesson 3: you can’t get what you want, until you know what you want
  o Compare lesson 1 and 2 for the gain and payoff, then choose the one you like

• Lesson 4: Put yourself in other’s shoes and try to figure out what they will do
  o If not strictly dominant, need to choose base on pair chosen, who would choose the better one for him

• Lesson 5: calculate the average gain from the game through the percentage
  o % * gain amount + ..+ % * gain amount = average gain (make % sum to 100)

• Grading fun:D 7:10-7:24