Game Theory by David KGame Theory by David K. Levinearticle submitted to the Nature Publishing. Group, Encyclopedia of Cognitive Science. Keywords: non- cooperative, game theory, strategy, Nash equilibrium, social situations. Article Definition: Game theory is the mathematical study of human interactions described by rules of play and alternative choices. Overview. Situations economists and mathematicians. Game theory has two main.
Non- cooperative game theory models. This article will focus on. Game theory starts from a description of. There are two distinct but related. It describes play by means of a game tree that explicitly indicates when players move, which moves are available, and what they know about the moves of other players and nature when they move. Most important it specifies the payoffs that players receive at the end of the game. List of games in game theory; Outline of artificial intelligence; Notes References and further reading. Wikiquote has quotations related to: Game theory.See also List of games in game theory. Many games studied by game theorists (including the famous prisoner's dilemma). This course is an introduction to game theory and strategic thinking. Repeated Games: Cooperation vs. 1 What is game theory? The object of study in game theory is the game, which is a formal model of an interactive. Strategies. Fundamental to game theory is the notion. A strategy is a set of instructions that a player could give to a friend or program on a computer so that the friend or computer could play the game on her behalf. Generally, strategies are contingent responses: in the game of chess, for example, a strategy should specify how to play for every possible arrangement of pieces on the board. An alternative to the extensive form is the. This is less detailed than the extensive form, specifying only the list of strategies available to each player. Since the strategies specify how each player is to play in each circumstance, we can work out from the strategy profile specifying each player's strategy what payoff is received by each player. This map from strategy profiles to payoffs is called the normal or strategic form. It is perhaps the most familiar form of a game, and is frequently given in the form of a game matrix: Player 2. Player 1not confessconfessnot confess. This matrix is the celebrated Prisoner's Dilemma game. In this game the two players are partners in a crime who have been captured by the police. Each suspect is placed in a separate cell, and offered the opportunity to confess to the crime. The rows of the matrix correspond to strategies of the first player. The columns are strategies of the second player. The numbers in the matrix are the payoffs: the first number is the payoff to the first player, the second the payoff to the second player. Notice that the total payoff to both players is highest if neither confesses so each receives 5. However, game theory predicts that this will not be the outcome of the game (hence the dilemma). Each player reasons as follows: if the other player does not confess, it is best for me to confess (9 instead of 5). If the other player does confess, it is also best for me to confess (1 instead of 0). So no matter what I think the other player will do, it is best to confess. The theory predicts, therefore, that each player following her own self- interest will result in confessions by both players. Equilibrium. The previous example illustrates the central. This is an example of a dominant strategy equilibrium: the incentive of each player to confess does not depend on how the other player plays. Dominant strategy is the most persuasive notion of equilibrium known to game theorists. In the experimental laboratory, however, players who play the prisoner's dilemma sometimes cooperate. The view of game theorists is that this does not contradict the theory, so much as reflect the fact that players in the laboratory have concerns besides monetary payoffs. An important current topic of research in game theory is the study of the relationship between monetary payoffs and the utility payoffs that reflect players' real incentive for making decisions. By way of contrast to the prisoner's dilemma. Player 2. Player 1operaballgameopera. This is known as the Battle of the Sexes game. The story goes that a husband and wife must agree on how to spend the evening. The husband (player 1) prefers to go to the ballgame (2 instead of 1), and the wife (player 2) to the opera (also 2 instead of 1). However, they prefer agreement to disagreement, so if they disagree both get 0. This game does not admit a dominant strategy equilibrium. If the husband thinks the wife's strategy is to choose the opera, his best response is to choose opera rather than ballgame (1 instead of 0). Conversely, if he thinks the wife's strategy is to choose the ballgame, his best response is ballgame (2 instead of 0). While in the prisoner's dilemma, the best response does not depend on what the other player is thought to be doing, in the battle of the sexes, the best response depends entirely on what the other player is thought to be doing. This is sometime called a coordination game to reflect the fact that each player wants to coordinate with the other player. For games without dominant strategies the. Nash equilibrium. In a Nash equilibrium, each player plays a best response, and correctly anticipates that her opponent will do the same. The battle of the sexes game has two Nash equilibria: both go to the opera, or both go to the ball game: if each expects the other to go to the opera (ballgame) the best response is to go to the opera (ballgame). By way of contrast, one going to the opera and one to the ballgame is not a Nash equilibrium: since each correctly anticipates that the other is doing the opposite, neither one is a playing a best response. Games with more than one equilibrium pose. Player 2. Player 1. Canterbury. Paris. Canterbury- 1,1. 1,- 1. Paris. 1,- 1- 1,1. You may recognize this game as the Matching Pennies game. There is, however, a more colorful story from Conan Doyle's Sherlock Holmes story The Last Problem. Moriarity (player 2) is pursuing Holmes (player 1) by train in order to kill Holmes and save himself. The train stops at Canterbury on the way to Paris. If both stop at Canterbury, Moriarity catches Holmes and wins the game (- 1 for Holmes, 1 for Moriarity). Similarly if both stop at Paris. Conversely, if they stop at different places, Holmes escapes (1 for Holmes and - 1 for Moriarity). This is an example of a zero sum game: one player's loss is another player's gain. In the story, Holmes stops at Canterbury, while Moriarity continues on to Paris. But it is easy to see that this is not a Nash equilibrium: Moriarity should have anticipated that Holmes would get off at Canterbury, and so his best response was to get off also at Canterbury. It would have been a coup- de- ma? The answer is that there. Instead of simply choosing. Canterbury or Paris, a player can flip a. This is an example. It is a mathematical fact, although not an easy one to prove, that every game with a finite number of players and finite number of strategies has at least one mixed strategy Nash equilibrium. The mixed strategy equilibrium of the matching pennies game is well known: each player should randomize 5. If Moriarity randomizes 5. Canterbury and Paris, then Holmes has a 5. Canterbury or Paris. Since he is indifferent between the two choices, he does not mind flipping a coin to decide between the two, and so there is no better choice than for him to randomize 5. Similarly when Holmes is randomizing 5. Moriarity to do the same. Each player, correctly anticipating that his opponent will randomize 5. So perhaps Holmes (or Conan Doyle) is not such a clever game theorist after all. Mixed strategy equilibrium points out an. Nash equilibrium that is often. Nash equilibrium. In matching pennies. Holmes and Moriarity are indifferent: they. However. it is only an equilibrium if they both happen. The central thing to. Nash equilibrium does. It merely proposes a way of. Like the issue of multiple. Glossary: Extensive form game. Normal form game. Dominant strategy equilibrium. Nash equilibrium. Reading List: K. Binmore, Fun and Games: A Text on Game Theory, D. C. Fernandez, Game Theory with Economic Applications Addison- Wesley, 1. A. Nalebuff, Thinking Strategically, Norton, 1. Dixit and Susan Skeath, Games of Strategy, WW Norton and Co, 1. D. Levine, The Theory of Learning in Games, MIT Press, 1. D. Tirole, Game Theory, MIT Press, 1. D. Kreps, A Course in Microeconomic Theory, Princeton University Press, 1. R. Raiffa, Games and Decisions, John Wiley and Sons, 1. R. Myerson, Game Theory: Analysis of Conflict, Harvard University Press. M. Rubinstein, A Course in Game Theory, MIT Press, 1.
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