[工学]Equilibrium Concepts in Two Player Games.pptVIP

Equilibrium Concepts in Two Player Games Kevin Byrnes Department of Applied Mathematics Statistics Nash Equilibria A set of strategies (x*,y*) in a two player game is a Nash equilibrium point if: f(x*,y*) =f(x,y*) for all x in S1 g(x*,y*)=g(x*,y) for all y in S2 Nash Equilibria More generally, a set of strategies (x1*,…,xn*) in an n player game is a Nash equilibrium point if: f1(x1*,…,xn*)=f1(x,...,xn*) for all x in S1 fn(x1*,…,xn*)=fn(x1*,…,x) for all x in Sn Nash Equilibria The key properties of a Nash equilibrium are that it is enforceable and guaranteed to exist under certain reasonable assumptions. Nash Equilibria Enforceability comes from the fact that every player is unilaterally maximizing his payoff, ie no player can single-handedly deviate to do better. To see why it must exist, consider the following sketch of a proof: Nash Equilibria Lemma 1: If f1,…,fn are concave, then the best response sets are convex Lemma 2: If f1,…,fn are also continuous and the strategy spaces are compact, then the best response sets form an upper hemi continuous correspondence Nash Equilibria Existence Theorem (Nash): Assuming that the fi are continuous and concave, and that the strategy spaces Si are compact, then a Nash equilibrium exists. Proof: By Lemmas 1 and 2 the BRi(.) are upper hemi continuous correspondences on compact sets. By Kakutani’s Fixed Point Thm. we then know that we must have a fixed point. Nash Equilibria Now let us consider a special type of game, namely a bimatrix game (ie both players have a finite number of pure strategies and payoff matrices) Let A be player 1’s payoff matrix, so Aij=f(si,sj), where si is a pure strategy in S1, and sj is a pure strategy in S2. Let B be player 2’s payoff matrix, so Bij=g(si,sj) Nash Equilibria Now let xi denote the probability with which player 1 plays si, and let yj denote the probability with which player 2 plays sj. Then a Nash equilibrium is a pair of strategies (x*,y*) such that x* satisfies (i