Ec4004 Lecture7 Game Theory Part Two
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Transcript of Ec4004 Lecture7 Game Theory Part Two
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EC4004Lecture 7Game Theory Part TwoDr Stephen Kinsella
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Any game described by
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Players
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Strategies
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Payoffs
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Nash Equilibrium
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And Now:
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Story
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2 Lads.Caught.
Separated.
Offered a deal:
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“If you confess and your companion doesn’t, I can promise you a six-month
sentence, whereas your companion will get ten years. If you both confess,
you will each get a three year sentence.”
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Demo Time.
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Emma Breen, 0730556
James Foley, 0739758
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Results
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086 399 83 06
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Normal. Form.
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Extensive. Form.
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.. .Confess
Confess Confess
Silent
Silent Silent
-3, -3 -10, -1 -1, -10 -2, -2
A
B B
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Step 1
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Step 2
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Step 3
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Step 4
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Step 5
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(-3, -3) is the Nash Equilibrium.
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But.
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Not the global optimum
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Stability.
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End.
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Try 6.7, 6.8, 6.9
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EC4004Lecture 7Game Theory Part TwoDr Stephen Kinsella