Game Theory Quiz 1

Game of Chicken

Payoff: (2,2), (3,1), (1,3), (4,4)

How to Win: commitment, communication, irrationality

Stag Hunt

Payoff: (3,3) , (0,1) , (1,0), (1,1)

How to win: Communication, commitment, punishment for betrayal

Pure Coordination: Beach

Payoffs: (2, 2) , (1,1) , (2,2), (1,1)

How to Win: communication in advance, focal point, convention

Ordinal Utility Function

ranking based on preferences (ordinal = option-based)

Cardinal Utility Function

ranking based on numeric intensity (cardinal = card #)

Objective Payoff

measured in concrete, observable units (objective = hard to object) ; EX: 2 years vs 5 years in jail

Subjective Payoff

based on personal value or individual preferences (subject = specific); EX: 8/10 for P1 & 4/10 for P2

Sequential Game Play

player one moves, then player two moves with “perfect information”

Simultaneous Game Play

both players move at the same time

Pareto-Optimal

when no one can be made better off by making someone else worse off — harm is needed for improvement

Pareto-Superior

when someone can be better off without making anyone worse off — someone can advance without sabotaging

Strict Dominance

1 option is better no matter what the other agent chooses — 1 choice is strictly better

Weak Dominance

1 option is better than another in at least one scenario or at least as good as another no matter what the other person chooses

Pure Strategy

player chooses the same move despite probability

Mixed Strategy

Player’s strategy is based on probability of all choices

Pay-Off Dominant

Nash equilibrium that makes at least 1 player better off without making anyone worse off — everyone’s highest payoff

Risk Dominant

nash equillibrium is less risky; safer option

Parametric Reasoning

thinking about immediate advantages rather than long-term

Strategic Reasoning

thinking about different perspectives and how it can affect the future — looking at your opponents moves

Iterated Games

1) cooperate for the first roun

2) copy the move of the last move

3) to break or beat the game, use mixed strategy

Sequential Game

single game done over time — choices or moves affect future choices or moves; solve with backward induction or subgame perfection