20 Subgame perfect equilibrium wars of attrition分析和总结分析和总结.docxVIP

Game Theory: Lecture 20 Transcript Overview: We first play andthen analyze wars of attrition ; the games that afflict trench warfare, strikes, and businesses in some competitive settings. We find long and damaging fights can occur in class in these games even when the prizes are small in relation to the accumulated costs. These could be caused by irrationality or by players having other goals like pride or reputation. But we argue that long, costly fights should be expected in these games even if everyone is rational and has standard goals. We show this first in a two-period version of the game and then in a potentially infinite version. There are equilibria in which the game ends fast without a fight, but there are also equilibria that can involve long fights. The only good news is that, the longer the fight and the higher the cost of fighting, the lower is the probability of such a fight. November 14, 2007 back Professor Ben Polak: Last time we looked at how to apply our new idea of sub-game perfect equilibrium to a whole bunch of games, and our general idea for how tosolve the sub-game perfect equilibrium is as follows. We looked at each sub-game. We solved for the Nash equilibrium in the sub-game, that is something we learned to do long ago. And then we rolled back the payoffs: we rolled them back up the tree. And towards the end we learned something interesting. Im notgoing to go back to it today--I just want to emphasize it. We learned that strategic effects matter. So in that investment game we looked at last time, when youre considering whether to rent a new piece of machinery, it made a very big difference whether you considered how this action would affect the actions of the other side; in this case, how it affects your competition. This is a very general idea, a very general point. So just to give you a couple of more examples, when youre designing tax systems--I mentioned this last time--when youre designing a tax system, to make some changes in the U.S.