Ch28Game Theory(微观-范里安-(上海交通大学,赵旭 ).pptVIP

Chapter Twenty-Eight Game Theory Game Theory Game theory models strategic behavior by agents who understand that their actions affect the actions of other agents. Some Applications of Game Theory The study of oligopolies (industries containing only a few firms) The study of cartels; e.g. OPEC The study of externalities; e.g. using a common resource such as a fishery. The study of military strategies. What is a Game? A game consists of a set of players a set of strategies for each player the payoffs to each player for every possible list of strategy choices by the players. Two-Player Games A game with just two players is a two-player game. We will study only games in which there are two players, each of whom can choose between only two strategies. An Example of a Two-Player Game The players are called A and B. Player A has two strategies, called “Up” and “Down”. Player B has two strategies, called “Left” and “Right”. The table showing the payoffs to both players for each of the four possible strategy combinations is the game’s payoff matrix. An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game An Example of a Two-Player Game Nash Equilibrium A play of the game where each strategy is a best reply to the other is a Nash equilibrium. Our example has two Nash equilibria; (U,L) and (D,R). An Example of a Two-Player Game An Example of a Two-Player Game The Prisoner’s Dilemma To see if Pareto-preferred outcomes must be what we see in the play of a game, consider a famous second example of a two-player game called the Prisoner’s Dilemma. The Prisoner’s Dilemma The Prisoner’s Dilemma Th