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EC4004Lecture 7Game Theory Part TwoDr Stephen Kinsella
Any game described by
Players
Strategies
Payoffs
Nash Equilibrium
And Now:
Story
2 Lads.Caught.
Separated.
Offered a deal:
“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.”
Demo Time.
Emma Breen, 0730556
James Foley, 0739758
Results
086 399 83 06
Normal. Form.
Extensive. Form.
.. .Confess
Confess Confess
Silent
Silent Silent
-3, -3 -10, -1 -1, -10 -2, -2
A
B B
Step 1
Step 2
Step 3
Step 4
Step 5
(-3, -3) is the Nash Equilibrium.
But.
Not the global optimum
Stability.
End.
Try 6.7, 6.8, 6.9
EC4004Lecture 7Game Theory Part TwoDr Stephen Kinsella
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