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Game Theory: Lecture 4 Transcript
Overview:
We continue the idea (from last time) of playing a best response to what we believe others will do. More particularly, we develop the idea that you should not play a strategy that is not a best response for any belief about others choices. We use this idea to analyze taking a penalty kick in soccer. Then we use it to analyze a profit-sharing partnership. Toward the end, we introduce a new notion: Nash Equilibrium.
September 17, 2007 back
Professor Ben Polak: So last time we introduced a new idea and the new idea was that of best response. And what was the idea? The idea was to think of a strategy that is the best you can do, given your belief about what the other people are doing: what your opponents are doing, what other players are doing. And you could think of this ─ you could think of this belief as the belief that rationalizes that choice. So if you have a boss you might want to ─ and he or she is going to ask you why you chose the action you did. If you took a best response to some believe, you can say I took this action because I believed other people are going to do this. And since that was the best you could do under that belief, youll hopefully keep your job.
I promised that today we would look at the most important game in the world. And, as announced last time, the most important game is the penalty kick game. So this is a game that occurs in soccer and just to give an idea of how important it is for those people who are unfortunate enough not to be soccer fans here, the last World Cup was decided on penalty kicks. In Englands case, England goes out of every single World Cup and every single European competition because it loses on penalty kicks, usually to Germany, it has to be said. And more immediately, this weekend, as all of you are thinking the most event in the world was whatever was happening in Congress to do with Iraq, actually, the most important event in the world was taking place in England where m
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