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  • 1.6 Nash Equilibrium - Examples

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    Kartik Chadha
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    Battle of the Sexes'' Game No strategy is (weakly) dominated L 3,1 0,0 P 0,0 1,3 technology adoption'': no dominant strategies two equilibria: old, Old and new, New Old Old New a simple collective-action game'': both revolt, both not revolt Again there are no dominated strategies revolt not revolt 1, 1 0,-2 not -2,0 0,0 See the importance of communication! not revolting is

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    Battle of the Sexes'' Game No strategy is (weakly) dominated L 3,1 0,0 P 0,0 1,3 technology adoption'': no dominant strategies two equilibria: old, Old and new, New Old Old New a simple collective-action game'': both revolt, both not revolt Again there are no dominated strategies revolt not revolt 1, 1 0,-2 not -2,0 0,0 See the importance of communication! not revolting is

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    10 views8 pages

    1.6 Nash Equilibrium - Examples

    Uploaded by

    Kartik Chadha
    Battle of the Sexes'' Game No strategy is (weakly) dominated L 3,1 0,0 P 0,0 1,3 technology adoption'': no dominant strategies two equilibria: old, Old and new, New Old Old New a simple collective-action game'': both revolt, both not revolt Again there are no dominated strategies revolt not revolt 1, 1 0,-2 not -2,0 0,0 See the importance of communication! not revolting is

    Copyright:

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    of 8

    ``Battle of the Sexes Game

    No strategy is (weakly) dominated L 3,1 0,0 P 0,0 1,3

    L P

    ``Battle of the Sexes Game


    There are two pure strategy Nash equilibria: L 3,1 0,0 P 0,0 1,3

    L P

    Nash Equilibrium in technology adoption:


    No dominant strategies Two equilibria: Old, Old and New, New

    Old Old
    New

    New 0,0
    2,2

    1,1
    0,0

    Nash Equilibrium in technology adoption:


    No dominant strategies Two equilibria: Old, Old and New, New

    Old Old
    New

    New 0,0
    2,2

    1,1
    0,0

    A Simple Collective-Action Game


    Revolt Not Revolt 1, 1 0,-2 Not -2,0 0,0

    Two Nash equilibria (in pure strategies): both revolt, both not revolt Again there are no dominated strategies

    A Simple Collective-Action Game


    Revolt Not Revolt 1, 1 0,-2 Not -2,0 0,0

    See the importance of communication! Not revolting is the ``safer strategy

    But can involve weakly dominated strategies:


    Movie Home
    Movie 1, 1 0,0 Home 0,0 0,0

    Home, Home is a Nash equilibrium...

    Justifications for Equilibrium


    Self-fulfilling No regrets

    Any non-equilibrium point is not stable in the sense that somebody could do better by deviating Is equilibrium justified by some process? How do we get there?

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