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**Simultaneous Games with complete - imperfect information
**

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Games Theory Applied

to Economics and Political Sciences

Ahmed Doghmi

National Institute of Statistics and Applied Economics,

Madinat Al Irfane, Rabat Institutes, 10100 Rabat, Morocco

,

Max Planck Institute of Economics, Strategic Interaction Group,

Kahlaische Straße 10, D-07745, Jena, Germany

and

HEC - Rabat, Centre de Rabat 67, rue Jaˆafar Essadik

Agdal 10080 Rabat, Morocco

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Game theory is a mathematical approach that is applied to

several areas:

1

in economics and business;

2

in biology (particularly evolutionary biology and ecology);

3

engineering;

4

political science;

5

international relations;

6

computer science;

7

philosophy.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Game theory is a mathematical approach that is applied to

several areas:

1

in economics and business;

2

in biology (particularly evolutionary biology and ecology);

3

engineering;

4

political science;

5

international relations;

6

computer science;

7

philosophy.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

It is considered as new discipline since the publication of the

book “Theory of Games and Economic Behavior” by J. V.

Neumann and Morgenstern (1944);

The goal of games theory is to model the behavior of agents

(or players) by studying their strategic interactions;

A player can be a individual, a ﬁrm, a political party...

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

It is considered as new discipline since the publication of the

book “Theory of Games and Economic Behavior” by J. V.

Neumann and Morgenstern (1944);

The goal of games theory is to model the behavior of agents

(or players) by studying their strategic interactions;

A player can be a individual, a ﬁrm, a political party...

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

It is considered as new discipline since the publication of the

book “Theory of Games and Economic Behavior” by J. V.

Neumann and Morgenstern (1944);

The goal of games theory is to model the behavior of agents

(or players) by studying their strategic interactions;

A player can be a individual, a ﬁrm, a political party...

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Branches of games theory: We distinguish two branches of

games:

1

Cooperative games: cooperative games theory describes only

the outcomes (without detail) that result when the players

come together in diﬀerent combinations;

2

Non-cooperative games: a game is a detailed model of all the

moves available to the players.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Branches of games theory: We distinguish two branches of

games:

1

Cooperative games: cooperative games theory describes only

the outcomes (without detail) that result when the players

come together in diﬀerent combinations;

2

Non-cooperative games: a game is a detailed model of all the

moves available to the players.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Branches of games theory: We distinguish two branches of

games:

1

Cooperative games: cooperative games theory describes only

the outcomes (without detail) that result when the players

come together in diﬀerent combinations;

2

Non-cooperative games: a game is a detailed model of all the

moves available to the players.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Now, we are going to look at the non-cooperative branch.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

A non-cooperative game is a situation where the consequences

of actions (or strategies) of each depend on those other;

To predict the outcome of a game, several concept solution

may be considered depending on the type of studied games;

For example, for simultaneous (static) games:

1

Where the information is complete, the concept of solution is

represented by the notion of Nash equilibrium: it is to ﬁnd a

list (or proﬁle) of individual strategies such that no agent has

incentive to unilaterally deviate from its strategy, if all others

do not change theirs;

2

In the case of incomplete information, games are generally

resolved by the notion of Bayesian equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

A non-cooperative game is a situation where the consequences

of actions (or strategies) of each depend on those other;

To predict the outcome of a game, several concept solution

may be considered depending on the type of studied games;

For example, for simultaneous (static) games:

1

Where the information is complete, the concept of solution is

represented by the notion of Nash equilibrium: it is to ﬁnd a

list (or proﬁle) of individual strategies such that no agent has

incentive to unilaterally deviate from its strategy, if all others

do not change theirs;

2

In the case of incomplete information, games are generally

resolved by the notion of Bayesian equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

A non-cooperative game is a situation where the consequences

of actions (or strategies) of each depend on those other;

To predict the outcome of a game, several concept solution

may be considered depending on the type of studied games;

For example, for simultaneous (static) games:

1

Where the information is complete, the concept of solution is

represented by the notion of Nash equilibrium: it is to ﬁnd a

list (or proﬁle) of individual strategies such that no agent has

incentive to unilaterally deviate from its strategy, if all others

do not change theirs;

2

In the case of incomplete information, games are generally

resolved by the notion of Bayesian equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

A non-cooperative game is a situation where the consequences

of actions (or strategies) of each depend on those other;

To predict the outcome of a game, several concept solution

may be considered depending on the type of studied games;

For example, for simultaneous (static) games:

1

Where the information is complete, the concept of solution is

represented by the notion of Nash equilibrium: it is to ﬁnd a

list (or proﬁle) of individual strategies such that no agent has

incentive to unilaterally deviate from its strategy, if all others

do not change theirs;

2

In the case of incomplete information, games are generally

resolved by the notion of Bayesian equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

A non-cooperative game is a situation where the consequences

of actions (or strategies) of each depend on those other;

To predict the outcome of a game, several concept solution

may be considered depending on the type of studied games;

For example, for simultaneous (static) games:

1

Where the information is complete, the concept of solution is

represented by the notion of Nash equilibrium: it is to ﬁnd a

list (or proﬁle) of individual strategies such that no agent has

incentive to unilaterally deviate from its strategy, if all others

do not change theirs;

2

In the case of incomplete information, games are generally

resolved by the notion of Bayesian equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Types of games: We distinguish two types of games:

1

Simultaneous games: the players take their strategies

simultaneously, ie, a player chooses his strategy without

knowing the other and vice versa.

2

Dynamic games: the players involved one after the other.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Types of games: We distinguish two types of games:

1

Simultaneous games: the players take their strategies

simultaneously, ie, a player chooses his strategy without

knowing the other and vice versa.

2

Dynamic games: the players involved one after the other.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Types of games: We distinguish two types of games:

1

Simultaneous games: the players take their strategies

simultaneously, ie, a player chooses his strategy without

knowing the other and vice versa.

2

Dynamic games: the players involved one after the other.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Types of games: We distinguish two types of games:

1

Simultaneous games: the players take their strategies

simultaneously, ie, a player chooses his strategy without

knowing the other and vice versa.

2

Dynamic games: the players involved one after the other.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Information:

1

Complete but imperfect information: the players know all

relevant parameters of games as strategies proﬁle S

i

and payoﬀ

functions, but the players do not know what others will choose;

2

Perfect information: For dynamic games where players have

seen what others do;

3

Incomplete information: there is private information.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Information:

1

Complete but imperfect information: the players know all

relevant parameters of games as strategies proﬁle S

i

and payoﬀ

functions, but the players do not know what others will choose;

2

Perfect information: For dynamic games where players have

seen what others do;

3

Incomplete information: there is private information.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction and Deﬁnitions

Information:

1

Complete but imperfect information: the players know all

relevant parameters of games as strategies proﬁle S

i

and payoﬀ

functions, but the players do not know what others will choose;

2

Perfect information: For dynamic games where players have

seen what others do;

3

Incomplete information: there is private information.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Assume that two accomplices i and j of a crime are

interviewed separately;

They have the choice between the strategy of confession and

that the accusation;

If i admits accusing j and j does not confess, i is released and

j is punishable by 10 years in prison;

If both confess, they each have a term of 6 years prison;

If neither confesses, they will each have one year in prison.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Assume that two accomplices i and j of a crime are

interviewed separately;

They have the choice between the strategy of confession and

that the accusation;

If i admits accusing j and j does not confess, i is released and

j is punishable by 10 years in prison;

If both confess, they each have a term of 6 years prison;

If neither confesses, they will each have one year in prison.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Assume that two accomplices i and j of a crime are

interviewed separately;

They have the choice between the strategy of confession and

that the accusation;

If i admits accusing j and j does not confess, i is released and

j is punishable by 10 years in prison;

If both confess, they each have a term of 6 years prison;

If neither confesses, they will each have one year in prison.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Assume that two accomplices i and j of a crime are

interviewed separately;

They have the choice between the strategy of confession and

that the accusation;

If i admits accusing j and j does not confess, i is released and

j is punishable by 10 years in prison;

If both confess, they each have a term of 6 years prison;

If neither confesses, they will each have one year in prison.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Assume that two accomplices i and j of a crime are

interviewed separately;

They have the choice between the strategy of confession and

that the accusation;

If i admits accusing j and j does not confess, i is released and

j is punishable by 10 years in prison;

If both confess, they each have a term of 6 years prison;

If neither confesses, they will each have one year in prison.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

1

Players: prisoner i and prisoner j ;

2

Strategies: {C, NC};

3

Payoﬀs: let u

i

(., .) denote the utility function of a player i .

- For prisoner i : u

i

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1;

- For prisoner j : u

j

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

1

Players: prisoner i and prisoner j ;

2

Strategies: {C, NC};

3

Payoﬀs: let u

i

(., .) denote the utility function of a player i .

- For prisoner i : u

i

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1;

- For prisoner j : u

j

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

1

Players: prisoner i and prisoner j ;

2

Strategies: {C, NC};

3

Payoﬀs: let u

i

(., .) denote the utility function of a player i .

- For prisoner i : u

i

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1;

- For prisoner j : u

j

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

1

Players: prisoner i and prisoner j ;

2

Strategies: {C, NC};

3

Payoﬀs: let u

i

(., .) denote the utility function of a player i .

- For prisoner i : u

i

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1;

- For prisoner j : u

j

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example: Prisoner Dilemma

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

1

Players: prisoner i and prisoner j ;

2

Strategies: {C, NC};

3

Payoﬀs: let u

i

(., .) denote the utility function of a player i .

- For prisoner i : u

i

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1;

- For prisoner j : u

j

(C, C) = −6; u

i

(C, NC) = 0;

u

i

(NC, C) = −10; u

i

(NC, NC) = −1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated strategies:

Example 1

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

Prisoner i C -6 0

NC -10 -1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated strategies:

Example 1

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

Prisoner i C -6 0

NC -10 -1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 1

Prisoner i C -6 0

NC -10 -1

−6 > −10 and 0 > −1 ⇒ strategy NC is strictly dominated by

strategy C.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 1

Prisoner i C -6 0

NC -10 -1

−6 > −10 and 0 > −1 ⇒ strategy NC is strictly dominated by

strategy C.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 1

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

Prisoner j

C NC

-6 -10

0 -1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 1

Prisoner j

Prisoner i

Confess (C) Not Confess (NC)

Confess (C) (-6,-6) (0,-10)

Not Confess (NC) (-10,0) (-1,-1)

Prisoner j

C NC

-6 -10

0 -1

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 1

Prisoner j

C NC

-6 -10

0 -1

−6 > −10 and 0 > −1 ⇒ strategy NC is strictly dominated by

strategy C;

For two players, strategy NC is strictly dominated by strategy C.

Thus, the combination (C, C) is a solution of game.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 1

Prisoner j

C NC

-6 -10

0 -1

−6 > −10 and 0 > −1 ⇒ strategy NC is strictly dominated by

strategy C;

For two players, strategy NC is strictly dominated by strategy C.

Thus, the combination (C, C) is a solution of game.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Notations and generalization

Let N = {1, 2, ..., n} be a set of players;

Each player has a set of strategies;

Let S

i

be strategies set of player i , the strategies proﬁle set is

denoted by S = S

1

×S

2

×... ×S

n

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Notations and generalization

Let N = {1, 2, ..., n} be a set of players;

Each player has a set of strategies;

Let S

i

be strategies set of player i , the strategies proﬁle set is

denoted by S = S

1

×S

2

×... ×S

n

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Notations and generalization

Let N = {1, 2, ..., n} be a set of players;

Each player has a set of strategies;

Let S

i

be strategies set of player i , the strategies proﬁle set is

denoted by S = S

1

×S

2

×... ×S

n

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Notations and generalization

The elements of S are denoted by

s = (s

1

, s

2

, ..., s

n

) = (s

i

, s

−i

), where

s

−i

= (s

1

, ..., s

i −1

, s

i +1

, ..., s

n

);

When s ∈ S and b

i

∈ S

i

,

(b

i

, s

−i

) = (s

1

, ..., s

i −i

, b

i

, s

i +1

, ..., s

n

) is obtained after

replacing s

i

by b

i

, and g(S

i

, s

−i

) is the set of results which

agent i can obtain when the other agents choose s

−i

from

S

−i

= Π

j ∈N,j =i

S

j

;

Payoﬀ function: Each player has a payoﬀ function

U

i

: S =

n

1

S

i

→R.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Notations and generalization

The elements of S are denoted by

s = (s

1

, s

2

, ..., s

n

) = (s

i

, s

−i

), where

s

−i

= (s

1

, ..., s

i −1

, s

i +1

, ..., s

n

);

When s ∈ S and b

i

∈ S

i

,

(b

i

, s

−i

) = (s

1

, ..., s

i −i

, b

i

, s

i +1

, ..., s

n

) is obtained after

replacing s

i

by b

i

, and g(S

i

, s

−i

) is the set of results which

agent i can obtain when the other agents choose s

−i

from

S

−i

= Π

j ∈N,j =i

S

j

;

Payoﬀ function: Each player has a payoﬀ function

U

i

: S =

n

1

S

i

→R.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Notations and generalization

The elements of S are denoted by

s = (s

1

, s

2

, ..., s

n

) = (s

i

, s

−i

), where

s

−i

= (s

1

, ..., s

i −1

, s

i +1

, ..., s

n

);

When s ∈ S and b

i

∈ S

i

,

(b

i

, s

−i

) = (s

1

, ..., s

i −i

, b

i

, s

i +1

, ..., s

n

) is obtained after

replacing s

i

by b

i

, and g(S

i

, s

−i

) is the set of results which

agent i can obtain when the other agents choose s

−i

from

S

−i

= Π

j ∈N,j =i

S

j

;

Payoﬀ function: Each player has a payoﬀ function

U

i

: S =

n

1

S

i

→R.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Generalization

Deﬁnition

Let Γ = {N, (S

i

)

i ∈N

, (u

i

)

i ∈N

} be a normal form game. If

s

i

, s

i

∈ S

i

, then s

i

is strictly dominated by s

i

if for all strategies

combination, the payoﬀ of player i is smaller with s

i

than that with

s

i

. Formally,

u

i

(s

1

, s

2

, ..., s

i −1

, s

i

, s

i +1

, ..., s

n

) < u

i

(s

1

, s

2

, ..., s

i −1

, s

i

, s

i +1

, ..., s

n

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

Player 2

Player 1

L M R

U (1,0) (1,2) (0,1)

D (0,3) (0,1) (2,0)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

Player 1

L M R

U 1 1 0

D 0 0 2

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

Player 1

L M R

U 1 1 0

D 0 0 2

For player 1, 1 > 0 and 1 > 0 but 0 < 2 ⇒ player 1 does not

admit strictly dominated strategy.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

Player 2

Player 1

L M R

U (1,0) (1,2) (0,1)

D (0,3) (0,1) (2,0)

Player 2

L M R

0 2 1

3 1 0

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

Player 2

L M R

0 2 1

3 1 0

2 > 1 and 1 > 0 ⇒ strategy R is strictly dominated by strategy

M.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

⇒ The game become:

Player 2

Player 1

L M

U (1,0) (1,2)

D (0,3) (0,1)

For player 1, we have:

Player 1

L M

U 1 1

D 0 0

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

Player 1

L M

U 1 1

D 0 0

strategy D is strictly dominated by strategy U;

Player 2 doses not admet strictly dominated strategy.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

Player 1

L M

U 1 1

D 0 0

strategy D is strictly dominated by strategy U;

Player 2 doses not admet strictly dominated strategy.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

⇒ The game will be reduced and we obtain:

Player 2

Player 1 L M

U (1,0) (1,2)

1

Player 1 is indiﬀerent between L and M;

2

For player 2, L is strictly dominated by M;

The combination (U, M) of payoﬀ (1, 2) is a solution of game.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

⇒ The game will be reduced and we obtain:

Player 2

Player 1 L M

U (1,0) (1,2)

1

Player 1 is indiﬀerent between L and M;

2

For player 2, L is strictly dominated by M;

The combination (U, M) of payoﬀ (1, 2) is a solution of game.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

⇒ The game will be reduced and we obtain:

Player 2

Player 1 L M

U (1,0) (1,2)

1

Player 1 is indiﬀerent between L and M;

2

For player 2, L is strictly dominated by M;

The combination (U, M) of payoﬀ (1, 2) is a solution of game.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 2

⇒ The game will be reduced and we obtain:

Player 2

Player 1 L M

U (1,0) (1,2)

1

Player 1 is indiﬀerent between L and M;

2

For player 2, L is strictly dominated by M;

The combination (U, M) of payoﬀ (1, 2) is a solution of game.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 3

Player 2

Player 1

L C R

T (0,4) (4,0) (5,3)

M (4,0) (0,4) (5,3)

B (3,5) (3,5) (6,6)

In this game, The method of iterative elimination of strictly

dominated strategies can not give us a solution;

Thus, we proceed to another concept of solution in pure

strategy: it is Nash Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 3

Player 2

Player 1

L C R

T (0,4) (4,0) (5,3)

M (4,0) (0,4) (5,3)

B (3,5) (3,5) (6,6)

In this game, The method of iterative elimination of strictly

dominated strategies can not give us a solution;

Thus, we proceed to another concept of solution in pure

strategy: it is Nash Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Iterative elimination of strictly dominated

strategies:Example 3

Player 2

Player 1

L C R

T (0,4) (4,0) (5,3)

M (4,0) (0,4) (5,3)

B (3,5) (3,5) (6,6)

In this game, The method of iterative elimination of strictly

dominated strategies can not give us a solution;

Thus, we proceed to another concept of solution in pure

strategy: it is Nash Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash Equilibrium: Example

Player 2

Player 1

L C R

T (0,4) (4,0) (5,3)

M (4,0) (0,4) (5,3)

B (3,5) (3,5) (6,6)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash Equilibrium: Example

Player 2

Player 1

L C R

T (0,4) (4,0) (5,3)

M (4,0) (0,4) (5,3)

B (3,5) (3,5) (6,6)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash Equilibrium: Example

Player 2

Player 1

L C R

T (0,4) (4,0) (5,3)

M (4,0) (0,4) (5,3)

B (3,5) (3,5) (6,6)

We obtain a Nash Equilibrium (B, R) of payoﬀs (6, 6).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash Equilibrium: Example

Player 2

Player 1

L C R

T (0,4) (4,0) (5,3)

M (4,0) (0,4) (5,3)

B (3,5) (3,5) (6,6)

We obtain a Nash Equilibrium (B, R) of payoﬀs (6, 6).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash Equilibrium: Example

In this example, we have:

For player 1:

U

1

(B, R) ≥ U

1

(T, R) for T ∈ {T, M, B};

U

1

(B, R) ≥ U

1

(M, R) for M ∈ {T, M, B};

For player 2:

U

2

(B, R) ≥ U

2

(B, L) for L ∈ {L, C, R};

U

2

(B, R) ≥ U

2

(B, C) for C ∈ {L, C, R}.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash Equilibrium for two-player: Generalization

Concept of stability: situation where no player has interest to

deviate unilaterally of his strategy.

Deﬁnition

A Nash equilibrium for two-player in pure strategies of a normal

form game Γ = {N = {1, 2}, (S

i

)

i =1,2

, (u

i

)

i =1,2

} is a proﬁle of

strategies (s

∗

1

, s

∗

2

) such that the strategy of each player s

∗

i

is a

better response to the strategies chosen by the other player (s

∗

i −1

),

i.e., u

1

(s

∗

1

, s

∗

2

) ≥ u

1

(s

1

, s

∗

2

) for all strategy s

1

∈ S

1

;

u

2

(s

∗

1

, s

∗

2

) ≥ u

2

(s

∗

1

, s

2

) for all strategy s

2

∈ S

2

;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash Equilibrium n Players

Deﬁnition (Nash 1951)

A Nash equilibrium for n players in pure strategies of a normal

form game Γ = {N, (S

i

)

i ∈N

, (u

i

)

i ∈N

} is a proﬁle of strategies

(s

∗

1

, s

∗

2

, ..., s

∗

n

) such that the strategy of each player s

∗

i

is a better

response to the strategies chosen by the other players

(s

∗

1

, s

∗

2

, ..., s

∗

i −1

, ..., s

∗

n

), i.e.,

u

i

(s

∗

1

, s

∗

2

, ..., s

∗

i −1

, s

∗

i

, s

∗

i +1

, ..., s

∗

n

) ≥ u

i

(s

∗

1

, s

∗

2

, ..., s

∗

i −1

, s

i

, s

∗

i +1

, ..., s

∗

n

)

for all strategy s

i

∈ S

i

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Nash equilibrium and iterative elimination (IE) method of

strictly dominated strategies

Proposition

If IE method eliminates all strategies except one then this strategy

is a Nash equilibrium;

If a strategy is a Nash equilibrium, then this strategy survives with

IE method.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Multiplicity of Nash Equilibrium

Player 2

Player 1

O F

O (2,1) (0,0)

F (0,0) (1,2)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Multiplicity of Nash Equilibrium

Player 2

Player 1

O F

O (2,1) (0,0)

F (0,0) (1,2)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Multiplicity of Nash Equilibrium

Player 2

Player 1

O F

O (2,1) (0,0)

F (0,0) (1,2)

In this game, we have two Nash equilibrium! they are the

strategies proﬁle (O, O) of payoﬀs (2,1) and the strategies proﬁle

(F, F) of payoﬀs (1,2).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Multiplicity of Nash Equilibrium

Player 2

Player 1

O F

O (2,1) (0,0)

F (0,0) (1,2)

In this game, we have two Nash equilibrium! they are the

strategies proﬁle (O, O) of payoﬀs (2,1) and the strategies proﬁle

(F, F) of payoﬀs (1,2).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

A Game without a Nash Equilibrium

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

A Game without a Nash Equilibrium

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

A Game without a Nash Equilibrium

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

This game does not admit a Nash equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

A Game without a Nash Equilibrium

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

This game does not admit a Nash equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Existence of Nash Equilibrium: Some deﬁnitions and

theorems

Deﬁnition (Upper hemicontinuous correspondence)

Let X be a compact set. A correspondence F : X ⇒X is said to

be upper hemicontinuous if its graph

g(F) ≡ {(x, y) : x ∈ X, y ∈ F(x)} is a closed set (in the usual

topology). An equivalent requirement is that given any x

∗

∈ X

and some sequence {x

q

}

∞

q=1

convergent to x

∗

, every sequence

{y

q

}

∞

q=1

with y

q

∈ F(x

q

) has a limit point y

∗

∈ F(x

∗

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Existence of Nash Equilibrium: Some deﬁnitions and

theorems

Theorem (Kakutani’s Fixed Point Theorem)

Let X ⊂ R

m

(m ∈ N) be a compact, convex, and nonempty set,

and F : X ⇒X an upper hemicontinuous correspondence with

convex and noempty images (i.e., ∀x ∈ X, F(x) is a nonempty and

convex subset of X). Then, the correspondence F has a ﬁxed

point, i.e., there exists some x

∗

∈ X such that x

∗

∈ F(x

∗

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Existence of Nash Equilibrium: Some deﬁnitions and

theorems

Deﬁnition (Quasi-concavity)

The function u

i

: S

1

×S

2

×... ×S

n

→R is quasi-concave en s

i

if

for all strategies proﬁle s

−i

, the set {s

i

: u

i

(s

i

, s

−i

) ≥ a} is convex.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Existence of Nash Equilibrium: Debreu, Fan, Glicksberg’s

Theorem, 1952

Theorem (Debreu, 1952; Fan, 1952; Glicksberg, 1952)

Let Γ be a game in strategic form such that, for each

i = 1, 2, ..., n, S

i

⊂ R

m

is compact and convex, and the function

u

i

: S

1

×S

2

×... ×S

n

→R is continuous in s = (s

1

, s

2

, ..., s

n

) and

quasi-concave in s

i

. Then, the game Γ has a Nash equilibrium in

pure strategies.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Economic application: Cournot’s duopoly model

Let two ﬁrms 1 and 2;

Let q1 = ﬁrm 1 quantity and q2 = ﬁrm 2 quantity;

Let P(Q) = a −Q be inverse demand function of price P

where Q is the total quantity produced (Q = q

1

+ q

2

) and a

is the absorption capacity limit of market;

P(Q) =

_

a −Q if Q ≤ a;

0 otherwise.

Firm i have the cost structure C

i

(q

i

) = cq

i

, the marginal costs

of production are equal and ﬁxed, they are represented by c.’

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Economic application: Cournot’s duopoly model

Following Cournot, ﬁrms strategically play the quantity

variable;

Players ⇒ two ﬁrms;

Payoﬀs ⇒ proﬁt of each ﬁrm, i.e., u

i

(q

i

, q

j

⇒Π

i

(q

i

, q

j

1

Π

i

(q

i

, q

j

= q

i

[a −(q

i

+ q

j

) −c];

2

The vector (q

∗

i

, q

∗

j

) is a Nash equilibrium if q

∗

i

resolves

Max

q

i

∈[0,a]

Π

i

(q

i

, q

∗

j

) = Max

q

i

∈[0,a]

q

i

[a −(q

i

+ q

∗

j

) −c].

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Economic application: Cournot’s duopoly model

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimality: Example

Prisoner j

Prisoner i

C NC

C (-6,-6) (0,-10)

NC (-10,0) (-1,-1)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimality: Example

Prisoner j

Prisoner i

C NC

C (-6,-6) (0,-10)

NC (-10,0) (-1,-1)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimality: Example

Prisoner j

Prisoner i

C NC

C (-6,-6) (0,-10)

NC (-10,0) (-1,-1)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimality: Example

Prisoner j

Prisoner i

C NC

C (-6,-6) (0,-10)

NC (-10,0) (−1, −1

. ¸¸ .

)

1

The combinaison (C, C) is a Nash Equilibrium;

2

The combinaison (NC, NC) is a Pareto Otimality Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimality: Example

Prisoner j

Prisoner i

C NC

C (-6,-6) (0,-10)

NC (-10,0) (−1, −1

. ¸¸ .

)

1

The combinaison (C, C) is a Nash Equilibrium;

2

The combinaison (NC, NC) is a Pareto Otimality Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimality: Example

Prisoner j

Prisoner i

C NC

C (-6,-6) (0,-10)

NC (-10,0) (−1, −1

. ¸¸ .

)

1

The combinaison (C, C) is a Nash Equilibrium;

2

The combinaison (NC, NC) is a Pareto Otimality Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimality: Deﬁnition

Deﬁnition

A set of strategies is Pareto-optimal iﬀ it is impossible to make at

least one person better oﬀ without making anyone else worse oﬀ.

Pareto solution selects the feasible strategies which are not weakly

dominated by an other strategy for all agents and not strictly

dominated for at least one player. Formally, it is deﬁned as follows.

Let u ∈ U, P(u) = {s ∈ S : ¯s ∈ S such that for all i ∈ N,

u

i

(¯s

i

, ¯s

−i

) ≥ u

i

(s

i

, s

−i

), and for some i ∈ N,

u

i

(¯s

i

, ¯s

−i

) > u

i

(s

i

, s

−i

)}.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimal Nash Equilibrium: Deﬁnition

Deﬁnition

A Pareto optimal Nash equilibrium in pure strategies of a normal

form game Γ = {N, (S

i

)

i ∈N

, (u

i

)

i ∈N

} is any Nash equilibrium

(s

∗

1

, s

∗

2

, ..., s

∗

n

) such that there does not exist another Nash

equilibrium (´s

1

, ´s

2

, ..., ´s

n

) with u

i

(s

∗

1

, s

∗

2

, ..., s

∗

n

) < u

i

(´s

1

, ´s

2

, ..., ´s

n

)

for all i ∈ N.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimal Nash Equilibrium: Example

Firm j

Firm i

Wait Invest

Wait (400,400) (0,300)

Invest (300,0) (200,200)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimal Nash Equilibrium: Example

Firm j

Firm i

Wait Invest

Wait (400,400) (0,300)

Invest (300,0) (200,200)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimal Nash Equilibrium: Example

Firm j

Firm i

Wait Invest

Wait (400,400) (0,300)

Invest (300,0) (200,200)

The combinations (Wait,Wait) and (Invest,Invest) are two

Nash equilibria;

The combination (Wait,Wait) is Pareto Optimal Nash

Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimal Nash Equilibrium: Example

Firm j

Firm i

Wait Invest

Wait (400,400) (0,300)

Invest (300,0) (200,200)

The combinations (Wait,Wait) and (Invest,Invest) are two

Nash equilibria;

The combination (Wait,Wait) is Pareto Optimal Nash

Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Pareto Optimal Nash Equilibrium: Example

Firm j

Firm i

Wait Invest

Wait (400,400) (0,300)

Invest (300,0) (200,200)

The combinations (Wait,Wait) and (Invest,Invest) are two

Nash equilibria;

The combination (Wait,Wait) is Pareto Optimal Nash

Equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

In this game, there is not a Nash equilibrium in pure strategies.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

In this game, there is not a Nash equilibrium in pure strategies.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Mixed strategy

Mixed strategy is the uncertainty which a player has on what

the other can make (Harsanyi 1973);

A mixed strategy is a probability distribution (q, 1 −q) where

q is probability to play H and 1 −q is probability to play T;

The mixed strategy (0,1) is simply the pure strategy T.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Mixed strategy: example

Player 2

Player 1

L M R

U (1,0) (1,2) (0,1)

D (0,3) (0,1) (2,0)

A mixed strategy for player 2 is a probability distribution (q,r,

1-q-r);

For example, the probability distribution (

1

3

,

1

3

,

1

3

) is equal for

L, M and R strategies.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Mixed strategy: example

Player 2

Player 1

L M R

U (1,0) (1,2) (0,1)

D (0,3) (0,1) (2,0)

A mixed strategy for player 2 is a probability distribution (q,r,

1-q-r);

For example, the probability distribution (

1

3

,

1

3

,

1

3

) is equal for

L, M and R strategies.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Mixed strategy: example

Player 2

Player 1

L M R

U (1,0) (1,2) (0,1)

D (0,3) (0,1) (2,0)

A mixed strategy for player 2 is a probability distribution (q,r,

1-q-r);

For example, the probability distribution (

1

3

,

1

3

,

1

3

) is equal for

L, M and R strategies.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Mixed strategy: Deﬁnition

Deﬁnition (Mixed strategy)

Let s

i

= (s

i 1

, s

i 1

, ..., s

ij

, ..., s

ik

) be the strategies set of a player i . A

mixed strategy for this player is a distribution probability

P

i

= (P

i 1

, P

i 1

, ..., P

ij

, ..., P

ik

) with P

ij

is the realization probability

to choose s

ij

and

k

j =1

P

ij

= 1.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy q with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy q with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy q with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy q with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Notation

Let ∆(S

i

) denote the set of probability distributions over S

i

;

We identify this set with the simplex: P

i

∈ ∆(S

i

) implies

s

i

∈S

i

P

i

(s

i

) = 1 and P

i

(s

i

) ≥ 0;

We refer to P

i

(s

i

) as a mixed strategy, while the members of

S

i

are pure strategies;

The support of a probability measure µ is deﬁned as x :

µ(x) > 0. For P ∈ ∆(S

i

) the support of P

i

is all s

i

such that

P

i

(s

i

) ≥ 0.

The probability of obtaining a speciﬁc (pure) strategies proﬁle

s = (s

j

)

j ∈N

is

j ∈N

P

j

(s

j

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Notation

Let ∆(S

i

) denote the set of probability distributions over S

i

;

We identify this set with the simplex: P

i

∈ ∆(S

i

) implies

s

i

∈S

i

P

i

(s

i

) = 1 and P

i

(s

i

) ≥ 0;

We refer to P

i

(s

i

) as a mixed strategy, while the members of

S

i

are pure strategies;

The support of a probability measure µ is deﬁned as x :

µ(x) > 0. For P ∈ ∆(S

i

) the support of P

i

is all s

i

such that

P

i

(s

i

) ≥ 0.

The probability of obtaining a speciﬁc (pure) strategies proﬁle

s = (s

j

)

j ∈N

is

j ∈N

P

j

(s

j

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Notation

Let ∆(S

i

) denote the set of probability distributions over S

i

;

We identify this set with the simplex: P

i

∈ ∆(S

i

) implies

s

i

∈S

i

P

i

(s

i

) = 1 and P

i

(s

i

) ≥ 0;

We refer to P

i

(s

i

) as a mixed strategy, while the members of

S

i

are pure strategies;

The support of a probability measure µ is deﬁned as x :

µ(x) > 0. For P ∈ ∆(S

i

) the support of P

i

is all s

i

such that

P

i

(s

i

) ≥ 0.

The probability of obtaining a speciﬁc (pure) strategies proﬁle

s = (s

j

)

j ∈N

is

j ∈N

P

j

(s

j

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Notation

Let ∆(S

i

) denote the set of probability distributions over S

i

;

We identify this set with the simplex: P

i

∈ ∆(S

i

) implies

i

∈S

i

P

i

(s

i

) = 1 and P

i

(s

i

) ≥ 0;

We refer to P

i

(s

i

) as a mixed strategy, while the members of

S

i

are pure strategies;

The support of a probability measure µ is deﬁned as x :

µ(x) > 0. For P ∈ ∆(S

i

) the support of P

i

is all s

i

such that

P

i

(s

i

) ≥ 0.

The probability of obtaining a speciﬁc (pure) strategies proﬁle

s = (s

j

)

j ∈N

is

P

j

(s

j

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Notation

Let ∆(S

i

) denote the set of probability distributions over S

i

;

We identify this set with the simplex: P

i

∈ ∆(S

i

) implies

i

∈S

i

P

i

(s

i

) = 1 and P

i

(s

i

) ≥ 0;

We refer to P

i

(s

i

) as a mixed strategy, while the members of

S

i

are pure strategies;

The support of a probability measure µ is deﬁned as x :

µ(x) > 0. For P ∈ ∆(S

i

) the support of P

i

is all s

i

such that

P

i

(s

i

) ≥ 0.

The probability of obtaining a speciﬁc (pure) strategies proﬁle

s = (s

j

)

j ∈N

is

j ∈N

P

j

(s

j

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Expected utility function: Deﬁnition

U

i

(P) =

s∈S

(

j ∈N

P

j

(s

j

))u

i

(s).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Deﬁnition

Deﬁnition

A mixed strategy proﬁle P

∗

is a mixed strategy Nash Equilibrium

for two player if

U

1

(P

∗

1

, P

∗

2

) ≥ U

1

(P

1

, P

∗

2

) for all distribution P

1

on S

1

;

U

2

(P

∗

1

, P

∗

2

) ≥ U

2

(P

∗

1

, P

2

) for all distribution P

2

on S

2

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy T with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

The best response of player 1 in pure strategy is H if q <

1

2

, is

T if q >

1

2

, and player is indiﬀerent between H and T if

q =

1

2

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy T with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

The best response of player 1 in pure strategy is H if q <

1

2

, is

T if q >

1

2

, and player is indiﬀerent between H and T if

q =

1

2

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy T with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

The best response of player 1 in pure strategy is H if q <

1

2

, is

T if q >

1

2

, and player is indiﬀerent between H and T if

q =

1

2

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy T with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

The best response of player 1 in pure strategy is H if q <

1

2

, is

T if q >

1

2

, and player is indiﬀerent between H and T if

q =

1

2

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

Player 2

Player 1

H T

H (-1,1) (1,-1)

T (1,-1) (-1,1)

If player 1 thinks that player 2 play strategy H with

probability q and play strategy T with probability 1 −q, then

the expected utility of player 1 is:

1

q(−1) + (1 −q)1 = 1 −2q if player 1 play H;

2

q(1) + (1 −q)(−1) = 2q −1 if player 1 play T.

The best response of player 1 in pure strategy is H if q <

1

2

, is

T if q >

1

2

, and player is indiﬀerent between H and T if

q =

1

2

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

For player 1: If player 1 play H with probability r and T with

probability 1 −r , then for each value of q, we will seek the

value of r noted r

∗

(q): (r

∗

, 1 −r

∗

) is better response to

(q, 1 −q);

U

1

(P

1

, P

2

) = r (1 −2q) + (1 −r )(2q −1)

= (2q −1) + r (2 −4q), this function is increasing in r if

2 −4q > 0 and it is decreasing if 2 −4q < 0;

The best response r = 1 (i.e. H) if q <

1

2

, and the best

response r = 0 (i.e. T) if q >

1

2

;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

For player 1: If player 1 play H with probability r and T with

probability 1 −r , then for each value of q, we will seek the

value of r noted r

∗

(q): (r

∗

, 1 −r

∗

) is better response to

(q, 1 −q);

U

1

(P

1

, P

2

) = r (1 −2q) + (1 −r )(2q −1)

= (2q −1) + r (2 −4q), this function is increasing in r if

2 −4q > 0 and it is decreasing if 2 −4q < 0;

The best response r = 1 (i.e. H) if q <

1

2

, and the best

response r = 0 (i.e. T) if q >

1

2

;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

For player 1: If player 1 play H with probability r and T with

probability 1 −r , then for each value of q, we will seek the

value of r noted r

∗

(q): (r

∗

, 1 −r

∗

) is better response to

(q, 1 −q);

U

1

(P

1

, P

2

) = r (1 −2q) + (1 −r )(2q −1)

= (2q −1) + r (2 −4q), this function is increasing in r if

2 −4q > 0 and it is decreasing if 2 −4q < 0;

The best response r = 1 (i.e. H) if q <

1

2

, and the best

response r = 0 (i.e. T) if q >

1

2

;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

For player 1: If player 1 play H with probability r and T with

probability 1 −r , then for each value of q, we will seek the

value of r noted r

∗

(q): (r

∗

, 1 −r

∗

) is better response to

(q, 1 −q);

U

1

(P

1

, P

2

) = r (1 −2q) + (1 −r )(2q −1)

= (2q −1) + r (2 −4q), this function is increasing in r if

2 −4q > 0 and it is decreasing if 2 −4q < 0;

The best response r = 1 (i.e. H) if q <

1

2

, and the best

response r = 0 (i.e. T) if q >

1

2

;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

We make the same reasoning for player 2: for each value of r ,

we will seek the value of q noted q

∗

(r ): (q

∗

, 1 −q

∗

) is better

response to (r , 1 −r );

If r <

1

2

, the best response is T (q

∗

(r ) = 0;

If r >

1

2

, the best response is H (q

∗

(r ) = 1;

If r =

1

2

, indiﬀerence.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

We make the same reasoning for player 2: for each value of r ,

we will seek the value of q noted q

∗

(r ): (q

∗

, 1 −q

∗

) is better

response to (r , 1 −r );

If r <

1

2

, the best response is T (q

∗

(r ) = 0;

If r >

1

2

, the best response is H (q

∗

(r ) = 1;

If r =

1

2

, indiﬀerence.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

We make the same reasoning for player 2: for each value of r ,

we will seek the value of q noted q

∗

(r ): (q

∗

, 1 −q

∗

) is better

response to (r , 1 −r );

If r <

1

2

, the best response is T (q

∗

(r ) = 0;

If r >

1

2

, the best response is H (q

∗

(r ) = 1;

If r =

1

2

, indiﬀerence.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

We make the same reasoning for player 2: for each value of r ,

we will seek the value of q noted q

∗

(r ): (q

∗

, 1 −q

∗

) is better

response to (r , 1 −r );

If r <

1

2

, the best response is T (q

∗

(r ) = 0;

If r >

1

2

, the best response is H (q

∗

(r ) = 1;

If r =

1

2

, indiﬀerence.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

The best responses in mixed strategies:

1

We make the same reasoning for player 2: for each value of r ,

we will seek the value of q noted q

∗

(r ): (q

∗

, 1 −q

∗

) is better

response to (r , 1 −r );

If r <

1

2

, the best response is T (q

∗

(r ) = 0;

If r >

1

2

, the best response is H (q

∗

(r ) = 1;

If r =

1

2

, indiﬀerence.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Two player mixed Nash equilibrium: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

Many players mixed Nash equilibrium

Theorem (Nash, 1951)

Let Γ = {N, (S

i

)

i ∈N

, (u

i

)

i ∈N

} be strategic form game. If N is ﬁnite

and S

i

is ﬁnite for all i , then, there is at least a Nash equilibrium in

mixed strategies.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames

The players intervene the ones after the others in a precise

order;

We suppose the ﬁnite number of strategies;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames

The players intervene the ones after the others in a precise

order;

We suppose the ﬁnite number of strategies;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames

The presentation of such game is to trace a tree (tree of

Kuhn):

If the number of blows is ﬁnite, the tree ends with sequences

of numbers that give the payoﬀ of each player.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames

The presentation of such game is to trace a tree (tree of

Kuhn):

If the number of blows is ﬁnite, the tree ends with sequences

of numbers that give the payoﬀ of each player.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Example

Suppose that we have a ﬁrm in monopoly situation (M);

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Example

Suppose that we have a new ﬁrm (NF) who want to make a

decision to enter or not to the market;

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Backward induction method

Monopoly ﬁrm M decision:

1

if NF does not enter, it suﬃces for M to continue to produce

the same quantity;

2

if NF enters, M may ﬁnd it beneﬁcial to yield since it ensures a

positive proﬁt equalizes to 4.

New ﬁrm NF decision: the ﬁrm NF which anticipates the

choice of M by putting itself at the place of M:

1

NF decides to enter;

Solution: NF enters and M yields ⇒ payoﬀ (4,4).

This method is called: Backward induction method: it

consists in reasoning starting from the end.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Backward induction method

Monopoly ﬁrm M decision:

1

if NF does not enter, it suﬃces for M to continue to produce

the same quantity;

2

if NF enters, M may ﬁnd it beneﬁcial to yield since it ensures a

positive proﬁt equalizes to 4.

New ﬁrm NF decision: the ﬁrm NF which anticipates the

choice of M by putting itself at the place of M:

1

NF decides to enter;

Solution: NF enters and M yields ⇒ payoﬀ (4,4).

This method is called: Backward induction method: it

consists in reasoning starting from the end.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Backward induction method

Monopoly ﬁrm M decision:

1

if NF does not enter, it suﬃces for M to continue to produce

the same quantity;

2

if NF enters, M may ﬁnd it beneﬁcial to yield since it ensures a

positive proﬁt equalizes to 4.

New ﬁrm NF decision: the ﬁrm NF which anticipates the

choice of M by putting itself at the place of M:

1

NF decides to enter;

Solution: NF enters and M yields ⇒ payoﬀ (4,4).

This method is called: Backward induction method: it

consists in reasoning starting from the end.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Backward induction method

Monopoly ﬁrm M decision:

1

if NF does not enter, it suﬃces for M to continue to produce

the same quantity;

2

if NF enters, M may ﬁnd it beneﬁcial to yield since it ensures a

positive proﬁt equalizes to 4.

New ﬁrm NF decision: the ﬁrm NF which anticipates the

choice of M by putting itself at the place of M:

1

NF decides to enter;

Solution: NF enters and M yields ⇒ payoﬀ (4,4).

This method is called: Backward induction method: it

consists in reasoning starting from the end.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Backward induction method

Monopoly ﬁrm M decision:

1

if NF does not enter, it suﬃces for M to continue to produce

the same quantity;

2

if NF enters, M may ﬁnd it beneﬁcial to yield since it ensures a

positive proﬁt equalizes to 4.

New ﬁrm NF decision: the ﬁrm NF which anticipates the

choice of M by putting itself at the place of M:

1

NF decides to enter;

Solution: NF enters and M yields ⇒ payoﬀ (4,4).

This method is called: Backward induction method: it

consists in reasoning starting from the end.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Backward induction method

Monopoly ﬁrm M decision:

1

if NF does not enter, it suﬃces for M to continue to produce

the same quantity;

2

if NF enters, M may ﬁnd it beneﬁcial to yield since it ensures a

positive proﬁt equalizes to 4.

New ﬁrm NF decision: the ﬁrm NF which anticipates the

choice of M by putting itself at the place of M:

1

NF decides to enter;

Solution: NF enters and M yields ⇒ payoﬀ (4,4).

This method is called: Backward induction method: it

consists in reasoning starting from the end.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

The concept of subgames: Backward induction method

Monopoly ﬁrm M decision:

1

if NF does not enter, it suﬃces for M to continue to produce

the same quantity;

2

if NF enters, M may ﬁnd it beneﬁcial to yield since it ensures a

positive proﬁt equalizes to 4.

New ﬁrm NF decision: the ﬁrm NF which anticipates the

choice of M by putting itself at the place of M:

1

NF decides to enter;

Solution: NF enters and M yields ⇒ payoﬀ (4,4).

This method is called: Backward induction method: it

consists in reasoning starting from the end.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Solution strategies:

Payoﬀ:

Remark: This solution is not Pareto optimal < (5,5,5)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Backward induction method: Example

Solution strategies:

Payoﬀ:

Remark: This solution is not Pareto optimal < (5,5,5)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Kuhn’s Theorem, 1953

Theorem (Kuhn, 1953)

Every dynamic game with perfect information has a Nash

equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

The concept of subgames

Economic application: Stackelberg Model (1934)

Economic application: Stackelberg Model (1934)

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Deﬁnitions

4 Players

Players 1 and 2 choose simultaneously two strategies s

1

∈ S

1

and s

2

∈ S

2

;

Players 3 and 4 observe s

1

and s

2

and choose simultaneously

s

3

∈ S

3

and s

4

∈ S

4

;

u

i

(s

1

, s

2

, s

3

, s

4

), i = 1, ..., 4.

Deﬁnition

Suppose that (s

∗

1

, s

∗

2

) is the unique Nash equilibrium in the ﬁrst

stage and (s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) a Nash equilibrium in the

second stage. The solution (s

∗

1

, s

∗

2

, s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) is

subgame perfect Nash equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Deﬁnitions

4 Players

Players 1 and 2 choose simultaneously two strategies s

1

∈ S

1

and s

2

∈ S

2

;

Players 3 and 4 observe s

1

and s

2

and choose simultaneously

s

3

∈ S

3

and s

4

∈ S

4

;

u

i

(s

1

, s

2

, s

3

, s

4

), i = 1, ..., 4.

Deﬁnition

Suppose that (s

∗

1

, s

∗

2

) is the unique Nash equilibrium in the ﬁrst

stage and (s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) a Nash equilibrium in the

second stage. The solution (s

∗

1

, s

∗

2

, s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) is

subgame perfect Nash equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Deﬁnitions

4 Players

Players 1 and 2 choose simultaneously two strategies s

1

∈ S

1

and s

2

∈ S

2

;

Players 3 and 4 observe s

1

and s

2

and choose simultaneously

s

3

∈ S

3

and s

4

∈ S

4

;

u

i

(s

1

, s

2

, s

3

, s

4

), i = 1, ..., 4.

Deﬁnition

Suppose that (s

∗

1

, s

∗

2

) is the unique Nash equilibrium in the ﬁrst

stage and (s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) a Nash equilibrium in the

second stage. The solution (s

∗

1

, s

∗

2

, s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) is

subgame perfect Nash equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Deﬁnitions

4 Players

Players 1 and 2 choose simultaneously two strategies s

1

∈ S

1

and s

2

∈ S

2

;

Players 3 and 4 observe s

1

and s

2

and choose simultaneously

s

3

∈ S

3

and s

4

∈ S

4

;

u

i

(s

1

, s

2

, s

3

, s

4

), i = 1, ..., 4.

Deﬁnition

Suppose that (s

∗

1

, s

∗

2

) is the unique Nash equilibrium in the ﬁrst

stage and (s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) a Nash equilibrium in the

second stage. The solution (s

∗

1

, s

∗

2

, s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) is

subgame perfect Nash equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Deﬁnitions

4 Players

Players 1 and 2 choose simultaneously two strategies s

1

∈ S

1

and s

2

∈ S

2

;

Players 3 and 4 observe s

1

and s

2

and choose simultaneously

s

3

∈ S

3

and s

4

∈ S

4

;

u

i

(s

1

, s

2

, s

3

, s

4

), i = 1, ..., 4.

Deﬁnition

Suppose that (s

∗

1

, s

∗

2

) is the unique Nash equilibrium in the ﬁrst

stage and (s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) a Nash equilibrium in the

second stage. The solution (s

∗

1

, s

∗

2

, s

∗

3

((s

∗

1

, s

∗

2

)), s

∗

4

((s

∗

1

, s

∗

2

))) is

subgame perfect Nash equilibrium.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

Two countries 1 and 2

In each country we ﬁnd:

1

A government which selected a rate;

2

A ﬁrm which produces a good for internal consumption and for

export;

3

Consumers who buy from the inside market compounding

resident ﬁrm and nonresident ﬁrm.

Let P

i

(Q

i

) = a −Q

i

be inverse demand function of price P

i

where Q

i

is the total quantity in market i and a is the

absorption capacity limit of market.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

Two countries 1 and 2

In each country we ﬁnd:

1

A government which selected a rate;

2

A ﬁrm which produces a good for internal consumption and for

export;

3

Consumers who buy from the inside market compounding

resident ﬁrm and nonresident ﬁrm.

Let P

i

(Q

i

) = a −Q

i

be inverse demand function of price P

i

where Q

i

is the total quantity in market i and a is the

absorption capacity limit of market.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

Two countries 1 and 2

In each country we ﬁnd:

1

A government which selected a rate;

2

A ﬁrm which produces a good for internal consumption and for

export;

3

Consumers who buy from the inside market compounding

resident ﬁrm and nonresident ﬁrm.

Let P

i

(Q

i

) = a −Q

i

be inverse demand function of price P

i

where Q

i

is the total quantity in market i and a is the

absorption capacity limit of market.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

Two countries 1 and 2

In each country we ﬁnd:

1

A government which selected a rate;

2

A ﬁrm which produces a good for internal consumption and for

export;

3

Consumers who buy from the inside market compounding

resident ﬁrm and nonresident ﬁrm.

Let P

i

(Q

i

) = a −Q

i

be inverse demand function of price P

i

where Q

i

is the total quantity in market i and a is the

absorption capacity limit of market.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

Two countries 1 and 2

In each country we ﬁnd:

1

A government which selected a rate;

2

A ﬁrm which produces a good for internal consumption and for

export;

3

Consumers who buy from the inside market compounding

resident ﬁrm and nonresident ﬁrm.

Let P

i

(Q

i

) = a −Q

i

be inverse demand function of price P

i

where Q

i

is the total quantity in market i and a is the

absorption capacity limit of market.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

Two countries 1 and 2

In each country we ﬁnd:

1

A government which selected a rate;

2

A ﬁrm which produces a good for internal consumption and for

export;

3

Consumers who buy from the inside market compounding

resident ﬁrm and nonresident ﬁrm.

Let P

i

(Q

i

) = a −Q

i

be inverse demand function of price P

i

where Q

i

is the total quantity in market i and a is the

absorption capacity limit of market.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

Two countries 1 and 2

In each country we ﬁnd:

1

A government which selected a rate;

2

A ﬁrm which produces a good for internal consumption and for

export;

3

Consumers who buy from the inside market compounding

resident ﬁrm and nonresident ﬁrm.

Let P

i

(Q

i

) = a −Q

i

be inverse demand function of price P

i

where Q

i

is the total quantity in market i and a is the

absorption capacity limit of market.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

A ﬁrm in country i produces a quantity h

i

for internal

consumption and a quantity e

i

for export;

Q

i

= h

i

+ e

j

, where e

j

is the exported quantity by the foreign

ﬁrm j to the market of country i ;

Firms have constants marginal costs c and no ﬁxed cost,

c

i

(h

i

, e

i

) = c(h

i

+ e

i

);

Each ﬁrm i pays a tax t

j

if it exports e

i

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

A ﬁrm in country i produces a quantity h

i

for internal

consumption and a quantity e

i

for export;

Q

i

= h

i

+ e

j

, where e

j

is the exported quantity by the foreign

ﬁrm j to the market of country i ;

Firms have constants marginal costs c and no ﬁxed cost,

c

i

(h

i

, e

i

) = c(h

i

+ e

i

);

Each ﬁrm i pays a tax t

j

if it exports e

i

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

A ﬁrm in country i produces a quantity h

i

for internal

consumption and a quantity e

i

for export;

Q

i

= h

i

+ e

j

, where e

j

is the exported quantity by the foreign

ﬁrm j to the market of country i ;

Firms have constants marginal costs c and no ﬁxed cost,

c

i

(h

i

, e

i

) = c(h

i

+ e

i

);

Each ﬁrm i pays a tax t

j

if it exports e

i

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

A ﬁrm in country i produces a quantity h

i

for internal

consumption and a quantity e

i

for export;

Q

i

= h

i

+ e

j

, where e

j

is the exported quantity by the foreign

ﬁrm j to the market of country i ;

Firms have constants marginal costs c and no ﬁxed cost,

c

i

(h

i

, e

i

) = c(h

i

+ e

i

);

Each ﬁrm i pays a tax t

j

if it exports e

i

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

The game:

1

Governments play in non-cooperative way in variable tax;

2

Firms observe tax rates and produce for internal consumption

and for export ;

3

The payoﬀ functions for ﬁrms: Π

i

(t

i

, t

j

, h

i

, e

i

, h

j

, e

j

) =

[a −(h

i

+ e

j

)]h

i

+ [a −(e

i

+ h

j

)]e

i

−c(h

i

+ e

i

) −t

j

e

i

For governments;

payoﬀs= the total welfare;

= consumer surplus + proﬁt of the resident ﬁrm + tax;

=

1

2

Q

2

i

+ Π

i

+ t

i

e

j

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

The game:

1

Governments play in non-cooperative way in variable tax;

2

Firms observe tax rates and produce for internal consumption

and for export ;

3

The payoﬀ functions for ﬁrms: Π

i

(t

i

, t

j

, h

i

, e

i

, h

j

, e

j

) =

[a −(h

i

+ e

j

)]h

i

+ [a −(e

i

+ h

j

)]e

i

−c(h

i

+ e

i

) −t

j

e

i

For governments;

payoﬀs= the total welfare;

= consumer surplus + proﬁt of the resident ﬁrm + tax;

=

1

2

Q

2

i

+ Π

i

+ t

i

e

j

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

The game:

1

Governments play in non-cooperative way in variable tax;

2

Firms observe tax rates and produce for internal consumption

and for export ;

3

The payoﬀ functions for ﬁrms: Π

i

(t

i

, t

j

, h

i

, e

i

, h

j

, e

j

) =

[a −(h

i

+ e

j

)]h

i

+ [a −(e

i

+ h

j

)]e

i

−c(h

i

+ e

i

) −t

j

e

i

For governments;

payoﬀs= the total welfare;

= consumer surplus + proﬁt of the resident ﬁrm + tax;

=

1

2

Q

2

i

+ Π

i

+ t

i

e

j

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

The game:

1

Governments play in non-cooperative way in variable tax;

2

Firms observe tax rates and produce for internal consumption

and for export ;

3

The payoﬀ functions for ﬁrms: Π

i

(t

i

, t

j

, h

i

, e

i

, h

j

, e

j

) =

[a −(h

i

+ e

j

)]h

i

+ [a −(e

i

+ h

j

)]e

i

−c(h

i

+ e

i

) −t

j

e

i

For governments;

payoﬀs= the total welfare;

= consumer surplus + proﬁt of the resident ﬁrm + tax;

=

1

2

Q

2

i

+ Π

i

+ t

i

e

j

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

The game:

1

Governments play in non-cooperative way in variable tax;

2

Firms observe tax rates and produce for internal consumption

and for export ;

3

The payoﬀ functions for ﬁrms: Π

i

(t

i

, t

j

, h

i

, e

i

, h

j

, e

j

) =

[a −(h

i

+ e

j

)]h

i

+ [a −(e

i

+ h

j

)]e

i

−c(h

i

+ e

i

) −t

j

e

i

For governments;

payoﬀs= the total welfare;

= consumer surplus + proﬁt of the resident ﬁrm + tax;

=

1

2

Q

2

i

+ Π

i

+ t

i

e

j

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

The game:

1

Governments play in non-cooperative way in variable tax;

2

Firms observe tax rates and produce for internal consumption

and for export ;

3

The payoﬀ functions for ﬁrms: Π

i

(t

i

, t

j

, h

i

, e

i

, h

j

, e

j

) =

[a −(h

i

+ e

j

)]h

i

+ [a −(e

i

+ h

j

)]e

i

−c(h

i

+ e

i

) −t

j

e

i

For governments;

payoﬀs= the total welfare;

= consumer surplus + proﬁt of the resident ﬁrm + tax;

=

1

2

Q

2

i

+ Π

i

+ t

i

e

j

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

The game:

1

Governments play in non-cooperative way in variable tax;

2

Firms observe tax rates and produce for internal consumption

and for export ;

3

The payoﬀ functions for ﬁrms: Π

i

(t

i

, t

j

, h

i

, e

i

, h

j

, e

j

) =

[a −(h

i

+ e

j

)]h

i

+ [a −(e

i

+ h

j

)]e

i

−c(h

i

+ e

i

) −t

j

e

i

For governments;

payoﬀs= the total welfare;

= consumer surplus + proﬁt of the resident ﬁrm + tax;

=

1

2

Q

2

i

+ Π

i

+ t

i

e

j

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

We solve this game:

If (t

∗

1

, t

∗

2

) is a Nash equilibrium in stage 1 and if

(h

∗

1

, e

∗

1

, h

∗

2

, e

∗

2

) is a Nash equilibrium in stage 1, then (h

∗

i

, e

∗

i

)

must solve Max

h

i

,e

i

≥0

Π

i

(t

i

, t

j

, h

i

, e

i

, h

∗

j

, e

∗

j

) (*);

¯

Π

i

(t

i

, t

j

, h

i

, e

i

, h

∗

j

, e

∗

j

) =

h

i

[a −(h

i

+ e

∗

j

) −c] + e

i

[a −(e

i

+ h

∗

j

) −c] −t

j

e

i

= proﬁt in market i + proﬁt in market j .

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

We solve this game:

If (t

∗

1

, t

∗

2

) is a Nash equilibrium in stage 1 and if

(h

∗

1

, e

∗

1

, h

∗

2

, e

∗

2

) is a Nash equilibrium in stage 1, then (h

∗

i

, e

∗

i

)

must solve Max

h

i

,e

i

≥0

Π

i

(t

i

, t

j

, h

i

, e

i

, h

∗

j

, e

∗

j

) (*);

¯

Π

i

(t

i

, t

j

, h

i

, e

i

, h

∗

j

, e

∗

j

) =

h

i

[a −(h

i

+ e

∗

j

) −c] + e

i

[a −(e

i

+ h

∗

j

) −c] −t

j

e

i

= proﬁt in market i + proﬁt in market j .

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

We solve this game:

If (t

∗

1

, t

∗

2

) is a Nash equilibrium in stage 1 and if

(h

∗

1

, e

∗

1

, h

∗

2

, e

∗

2

) is a Nash equilibrium in stage 1, then (h

∗

i

, e

∗

i

)

must solve Max

h

i

,e

i

≥0

Π

i

(t

i

, t

j

, h

i

, e

i

, h

∗

j

, e

∗

j

) (*);

¯

Π

i

(t

i

, t

j

, h

i

, e

i

, h

∗

j

, e

∗

j

) =

h

i

[a −(h

i

+ e

∗

j

) −c] + e

i

[a −(e

i

+ h

∗

j

) −c] −t

j

e

i

= proﬁt in market i + proﬁt in market j .

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

(*) becomes:

Max

h

i

≥0

h

i

[a −(h

i

+ e

∗

j

) −c] ⇒ h

∗

i

=

a−c+t

i

3

;

Max

e

i

≥0

e

i

[a −(e

i

+ h

∗

j

) −c] −t

j

e

i

⇒ e

∗

i

=

a−c−2t

j

3

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

(*) becomes:

Max

h

i

≥0

h

i

[a −(h

i

+ e

∗

j

) −c] ⇒ h

∗

i

=

a−c+t

i

3

;

Max

e

i

≥0

e

i

[a −(e

i

+ h

∗

j

) −c] −t

j

e

i

⇒ e

∗

i

=

a−c−2t

j

3

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

(*) becomes:

Max

h

i

≥0

h

i

[a −(h

i

+ e

∗

j

) −c] ⇒ h

∗

i

=

a−c+t

i

3

;

Max

e

i

≥0

e

i

[a −(e

i

+ h

∗

j

) −c] −t

j

e

i

⇒ e

∗

i

=

a−c−2t

j

3

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

After solving the second stage, we will solve the ﬁrst stage:

Max

t

i

≥0

Π

i

(t

i

, t

j

, h

∗

i

, e

∗

i

, h

∗

j

, e

∗

j

);

After calculates: Total

welfare=

(2(a−c)−t

i

)

2

18

+

(a−c+t

i

)

2

9

+

(a−c−2t

j

)

2

9

+ t

i

(a−c−2t

i

)

3

;

⇒ t

∗

i

=

a−c

3

, i = 1, 2;

⇒ h

∗

i

=

4(a−c)

9

, e

∗

i

=

a−c

9

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

After solving the second stage, we will solve the ﬁrst stage:

Max

t

i

≥0

Π

i

(t

i

, t

j

, h

∗

i

, e

∗

i

, h

∗

j

, e

∗

j

);

After calculates: Total

welfare=

(2(a−c)−t

i

)

2

18

+

(a−c+t

i

)

2

9

+

(a−c−2t

j

)

2

9

+ t

i

(a−c−2t

i

)

3

;

⇒ t

∗

i

=

a−c

3

, i = 1, 2;

⇒ h

∗

i

=

4(a−c)

9

, e

∗

i

=

a−c

9

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

After solving the second stage, we will solve the ﬁrst stage:

Max

t

i

≥0

Π

i

(t

i

, t

j

, h

∗

i

, e

∗

i

, h

∗

j

, e

∗

j

);

After calculates: Total

welfare=

(2(a−c)−t

i

)

2

18

+

(a−c+t

i

)

2

9

+

(a−c−2t

j

)

2

9

+ t

i

(a−c−2t

i

)

3

;

⇒ t

∗

i

=

a−c

3

, i = 1, 2;

⇒ h

∗

i

=

4(a−c)

9

, e

∗

i

=

a−c

9

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

After solving the second stage, we will solve the ﬁrst stage:

Max

t

i

≥0

Π

i

(t

i

, t

j

, h

∗

i

, e

∗

i

, h

∗

j

, e

∗

j

);

After calculates: Total

welfare=

(2(a−c)−t

i

)

2

18

+

(a−c+t

i

)

2

9

+

(a−c−2t

j

)

2

9

+ t

i

(a−c−2t

i

)

3

;

⇒ t

∗

i

=

a−c

3

, i = 1, 2;

⇒ h

∗

i

=

4(a−c)

9

, e

∗

i

=

a−c

9

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Example: international economy

After solving the second stage, we will solve the ﬁrst stage:

Max

t

i

≥0

Π

i

(t

i

, t

j

, h

∗

i

, e

∗

i

, h

∗

j

, e

∗

j

);

After calculates: Total

welfare=

(2(a−c)−t

i

)

2

18

+

(a−c+t

i

)

2

9

+

(a−c−2t

j

)

2

9

+ t

i

(a−c−2t

i

)

3

;

⇒ t

∗

i

=

a−c

3

, i = 1, 2;

⇒ h

∗

i

=

4(a−c)

9

, e

∗

i

=

a−c

9

.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Deﬁnition of implementation

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Deﬁnition of the implementation

A social choice correspondence (SCC): is a correspondence F

from a set of class of admissible preference into the set of

alternatives (or options) A, that associates with every

preference proﬁle R a nonempty subset of A;

A solution concept: is represented by the set of Nash

equilibria N(g, R, S) of the game (Γ, R).

A mechanism (or form game): is given by Γ = (S, g) where

S = Π

i ∈N

S

i

; S

i

denotes the strategy set of the agent i and g

is a function from S to A;

Implementability:F(R) = g(N(g, R, S)).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Maskin’s Mechanism (1977,1999)

- R

i

: a preference relation of the individual i (complete, transitive,

and reﬂexive);

- L(a, R

i

) = {b ∈ A | aR

i

b} is the lower contour set for agent i at

alternative a;

Rule 1: If for each i ∈ N, s

i

= (R, a, m) and a ∈ F(R), then

g(s) = a.

Rule 2: If for some i , s

j

= (R, a, m) for all j = i , a ∈ F(R) and

s

i

= (R

i

, a

i

, m

i

) = (R, a, m), then:

g(s) =

_

a

i

if a

i

∈ L(a, R

i

),

a otherwise.

Rule 3: In any other situation, g(s) = a

i

∗

, where i

∗

is the index of

the player of which the number m

i

∗

is largest. If there are several

individuals who check this condition, the smallest index i will be

chosen.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Maskin’s theorems (1977,1999)

Deﬁnition (Maskin monotonicity)

A SCC F satisﬁes monotonicity if for all R, R

∈ , for any

a ∈ F(R), if for any i ∈ N, L(a, R

i

) ⊆ L(a, R

i

), then a ∈ F(R

).

Example 1: F satisﬁes Maskin monotonicity.

R: R

1

R

2

R

3

b b a

a c c

c a b

,

R

: R

1

R

2

R

3

a b a

b a c

c c b

F(R) = {a} F(R

) = {a}

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Maskin’s theorems (1977,1999)

Example 2: F does not satisfy Maskin monotonicity.

R: R

1

R

2

R

3

b b a

a c c

c a b

,

R

: R

1

R

2

R

3

b a a

a b c

c c b

F(R) = {a, b} F(R

) = {b}

Theorem (Maskin 1977,1999)

If a SCC F is Nash implementable, then F satisﬁes monotonicity.

Proof.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Maskin’s theorems (1977,1999)

Deﬁnition (No veto power)

A SCC F satisﬁes no veto power if for i , R ∈ , and a ∈ A, if

L(a, R

j

) = A for all j ∈ N\{i }, then a ∈ F(R).

Example 3:

R: R

1

R

2

R

3

a a b

b c c

c b a

F(R) = {a}

Theorem (Maskin 1977,1999)

If n ≥ 3, and if a SCC satisﬁes monotonicity and no veto power

conditions, then F is Nash implementable.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Borda rule

For this rule, each individual assigns points to alternatives

according to its ranking, for example, for the m alternatives

available, the favorite alternative obtains m points, the next m −1

and so on. The Borda rule selects alternatives which have the

highest score.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Borda rule

Example. Let N = {1, 2, 3} and X = {x, y, z}. Let R, R

∈ be

deﬁned by:

R: R

1

R

2

R

3

x y z

y x x

z z y

R

: R

1

R

2

R

3

x,y y z

z x x,y

z

B(R) = {x} B(R

) = {y}

We have x ∈ B(R), it is very easy to see that the inclusion of

Maskin monotonicity is checked, but x / ∈ B(R

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Plurality rule

For this rule, each individual assigns points to top-ranking

alternatives. The Plurality rule selects alternatives which have the

highest score. The plurality rule does not satisfy Maskin

monotonicity as shown in the following example.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Plurality rule

Example. Let N = {1, 2, 3} and X = {x, y, z}. Let R, R

∈ be

deﬁned by:

R: R

1

R

2

R

3

y x x

x y z

z z y

R

: R

1

R

2

R

3

y x,y x,y

x,z z z

P(R) = {x} P(R

) = {y}

We have x ∈ P(R), it is very easy to see that the inclusion Maskin

monotonicity is checked, but x / ∈ P(R

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Anti-plurality rule

For this rule, each individual assigns the equal points to all ranking

alternatives, except for bottom-ranked alternative, it assigns zero

point. The Anti-plurality rule selects alternatives which have the

highest score. This rule does not satisfy Maskin monotonicity as

shown in the following example.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Anti-plurality rule

Example. Let N = {1, 2, 3} and X = {x, y, z}. Let R, R

∈ be

deﬁned by:

R: R

1

R

2

R

3

z y z

y x x

x z y

R

: R

1

R

2

R

3

z y z

y x,z x

x y

A(R) = {x, y, z} A(R

) = {z}

We have x, y ∈ A(R), it is very easy to see that the inclusion of

Maskin monotonicity is checked, but x, y / ∈ A(R

) .

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Related literature: other works

Moore and Reppulo (1990): necessary and suﬃcient

conditions;

Sj¨ostr¨om(1991): algorithm;

Danilov (1992), Yamato (1992): strong monotonicity

(suﬃcient);

Ziad (1997, 1998): version of strong monotonicity (necessary)

+ algorithm;

Benoˆıt and Ok (2006): Maskin monotonicity + limited veto;

Doghmi and Ziad (2008), variants of monotonicity + variants

of no-veto power + unanimity.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Danilov’s - Yamato’s theorems: Essential options

Deﬁnition (Essential options)

Let i be a player and B ⊂ A. An alternative b ∈ B is essential for i

in set B if b ∈ F(R) for some preference proﬁle R such that

L(b, R

i

) ⊂ B. The set of all essential elements is denoted as

Ess

i

(F, B).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Danilov’s - Yamato’s theorems: Strong monotonicity

Deﬁnition (Strong monotonicity)

A SCC F satisﬁes strong monotonicity if for all R, R

∈ and for

all a ∈ F(R), if for all i ∈ N, Ess

i

(F, L(a, R

i

)) ⊂ L(a, R

i

), then

a ∈ F(R

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Danilov’s - Yamato’s theorems: Example of strong

monotonicity

Example 1: F satisﬁes strong monotonicity.

R: R

1

R

2

R

3

a c c

b b b

c a a

,

R

: R

1

R

2

R

3

a c c

c a a

b b b

F(R) = {a, b} F(R

) = {a}

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Danilov’s - Yamato’s theorems: Example of strong

monotonicity.

Example 2: F does not satisfy strong monotonicity

R: R

1

R

2

R

3

a c c

b a a

c b b

,

R

: R

1

R

2

R

3

b c c

a a a

c b b

F(R) = {a, c} F(R

) = {c}

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Danilov’s - Yamato’s theorems

Theorem (Danilov (1992), Yamato (1992))

If n ≥ 3, and if a SCC satisﬁes strong monotonicity, then F is

Nash implementable.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Yamato’s Mechanism

Rule 1: If for each i ∈ N, s

i

= (R, a, 0) and a ∈ F(R), then

g(s) = a.

Rule 2: If for some i , s

j

= (R, a, 0) for all j = i , a ∈ F(R) and

s

i

= (R

i

, a

i

, m

i

) = (R, a, 0), then:

g(s) =

_

a

i

if a

i

∈ Ess

i

(F, L(a, R

i

)),

a otherwise.

Rule 3: In any other situation, g(s) = a

i

, where

i = (

j ∈N

n

j

)(mod n) + 1.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Applications in exchange economies with single-peaked

preferences

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

Applications in exchange economies with single-peaked

preferences

Thomson (1990): intersections of the monotonic SCCs satisfy

neither no veto power nor strong monotonicity. He

implemented these correspondences by diﬃcult algorithm;

Doghmi and Ziad (2008) identiﬁed new simple suﬃcient

conditions to implement these correspondences.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Danilov’s - Yamato’s theorems

What happens about the implementability of the SCCs in

these restricted domains when there are indiﬀerent

preferences?

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

Plan

1

Introduction

2

Simultaneous Games with complete - imperfect information

Example: prisoner’s dilemma game

Iterative elimination of strictly dominated strategies

Nash Equilibrium

Nash Equilibrium and Pareto Optimality

Mixed Nash Equilibrium

3

Dynamic (Extensive form) games with perfect information

The concept of subgames

Economic application: Stackelberg Model (1934)

4

Dynamic (Sequential) games with complete and imperfect

information

5

Nash Implementation

Introduction

Maskin’s theorems (1977,1999)

Applications to political sciences: voting rules

Borda rule

Plurality rule

Anti-plurality rule

Danilov’s - Yamato’s theorems

6

Nash Implementation under Domain Restrictions with

Indiﬀerences

Nash implementation in exchange economies with

single-plateaued preferences

New suﬃcient Conditions

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

Single-plateaued preferences

Figure: Single-plateaued preferences.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

Indiﬀerent options subset

Deﬁnition (Indiﬀerent options subset)

For any agent’s i preference R

i

, any alternative a ∈ F(R), for some

singleton “operator” {o} ∈ LI (a, R

i

) with o = a, the indiﬀerent

options subset is the subset I (a, o, R

i

) = {b ∈ A \ {a, o} s.t.

a ∼

i

b ∼

i

o}.

Remark

I (a, o, R

i

) = ∅ if |LI (a, R

i

)| ≥ 3, otherwise I (a, o, R

i

) = ∅.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

Indiﬀerent options subset

Deﬁnition (Indiﬀerent options subset)

For any agent’s i preference R

i

, any alternative a ∈ F(R), for some

singleton “operator” {o} ∈ LI (a, R

i

) with o = a, the indiﬀerent

options subset is the subset I (a, o, R

i

) = {b ∈ A \ {a, o} s.t.

a ∼

i

b ∼

i

o}.

Remark

I (a, o, R

i

) = ∅ if |LI (a, R

i

)| ≥ 3, otherwise I (a, o, R

i

) = ∅.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

I-monotonicity

Deﬁnition (I-monotonicity)

A SCC F satisﬁes I-monotonicity if for all R, R

∈ , for any

a ∈ F(R), if for any i ∈ N, LS(a, R

i

) ∪ I (a, o, R

i

) ⊆ L(a, R

i

), then

a ∈ F(R

).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

Example

Example 1: A = {a, b, c, d, e, f }, N = {1, 2, 3} and = {R, R

}

are deﬁned by:

R: R

1

R

2

R

3

e b b,d

a,c,d a,c a,c

f d f

b f e

e

R

: R

1

R

2

R

3

a,b,c,d,e b a,b

f ad c,d

c e,f

e,f

F(R) = {a, f } F(R

) = {a, b, c}

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

I -weak no veto power

Deﬁnition (I -weak no veto power)

A SCC F satisﬁes I -weak no veto power if for i , R ∈ , and

a ∈ F(R), if for R

∈ , b ∈ LS(a, R

i

) ∪ I (a, o, R

i

) ⊆ L(b, R

i

) and

L(b, R

j

) = A for all j ∈ N\{i }, then b ∈ F(R

).

Remark

If I (a, o, R

i

) = ∅, then I -weak no veto power becomes equivalent

to strict weak no veto power. Otherwise, there is no-logical

relationship between the two conditions.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

I -weak no veto power

Deﬁnition (I -weak no veto power)

A SCC F satisﬁes I -weak no veto power if for i , R ∈ , and

a ∈ F(R), if for R

∈ , b ∈ LS(a, R

i

) ∪ I (a, o, R

i

) ⊆ L(b, R

i

) and

L(b, R

j

) = A for all j ∈ N\{i }, then b ∈ F(R

).

Remark

If I (a, o, R

i

) = ∅, then I -weak no veto power becomes equivalent

to strict weak no veto power. Otherwise, there is no-logical

relationship between the two conditions.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

Unanimity

Deﬁnition (Unanimity)

An SCC F satisﬁes unanimity if for any a ∈ A, any R ∈ , and for

any i ∈ N, L(a, R

i

) = A implies a ∈ F(R).

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

Introduction

Simultaneous Games with complete - imperfect information

Dynamic (Extensive form) games with perfect information

Dynamic (Sequential) games with complete and imperfect information

Nash Implementation

Nash Implementation under Domain Restrictions with Indiﬀerences

Nash implementation in exchange economies with single-plateaued preferences

Doghmi and Ziad’s theorem

Theorem (Doghmi and Ziad (2012))

Let n ≥ 3. If a SCC F satisﬁes I-monotonicity, I -weak no veto

power and unanimity, then F can be implemented in Nash

equilibria.

Ahmed Doghmi Games Theory Applied to Economics and Political Sciences

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