19 Subgame perfect equilibrium matchmaking and strategic分析和总结分析和总结.docxVIP

Game Theory: Lecture 19 Transcript Overview: We analyze three games using our new solution concept, subgame perfect equilibrium (SPE). The first game involves players trusting that others will not make mistakes. It has three Nash equilibria but only one is consistent with backward induction. We show the other two Nash equilibria are not subgame perfect: each fails to induce Nash in a subgame. The second game involves a matchmaker sending a couple on a date. There are three Nash equilibria in the dating subgame. We construct three corresponding subgame perfect equilibria of the whole game by rolling back eachof the equilibrium payoffs from the subgame. Finally, we analyze a game in which a firm has to decide whether to invest in a machine that will reduce its costs of production. We learn that the strategic effects of this decision--its effect on the choices of other competing firms--can be large, and if we ignore them we will make mistakes. November 12, 2007 back Professor Ben Polak: So last time we covered a whole bunch of new ideas, and it was really quite a lot of ideas for one class. Heres some of the ideas we covered. We talked about information sets, and these were ways to allow us to model imperfect information. So whats imperfect information? Its a way of being able to capture both simultaneity in moves and sequential moves in the same game. So its a way thats going to allow us to meld the lessons from before the mid-term and after the mid-term. Then we talked about what strategies meant in this context, and the basic idea is strategies are instructions--strategies for each player--give them an instruction at each of their information sets. Then we talked about what sub-games were, and, leaving aside technicalities, sub-games were just games within games. And finally we introduced the idea of sub-game perfection which is our new solution concept that refines the idea of Nash equilibrium. What sub-game perfection is going to do is its going to instruct the pl