Any strategic situation can be modeled as a game by using four elements: players, strategies, payoffs, and information. When the structure of the game is common knowledge for all players, the game is said to have imperfect information. A best response is a strategy that produces the highest payoff among all possible strategies for a player given what the other player is doing.
Any strategic situation can be modeled as a game by using four elements: players, strategies, payoffs, and information. When the structure of the game is common knowledge for all players, the game is said to have imperfect information. A best response is a strategy that produces the highest payoff among all possible strategies for a player given what the other player is doing.
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter15: Strategic Games
Section: Chapter Questions
Problem 15.4IP
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Any strategic situation can be modeled as a game by using four elements: players, strategies, payoffs, and information.
When the structure of the game is common knowledge for all players, the game is said to have imperfect information.
A best response is a strategy that produces the highest payoff among all possible strategies for a player given what the other player is doing.
A Nash equilibrium is stable, meaning that a player has an incentive to deviate unilaterally to some other strategy.
The prisoner's dilemma represents a situation where the Nash equilibrium does not reflect a mutually beneficial outcome
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