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Lecture 4 17 Sep 07
Se
Peoatty Kick Came
ork
Jn
Fectseanth v. Liverpool
WR ie
Hoo chance
Of Sewing
Eu,(1, pt)
wir
M is oor a BR to any belief
Do aot shoot te middle
Lesson
Countess you are Germen)
Lesson Do not Choose a stategy thet is never a
BR to any belief
peal nvenbers
"LU = natucal
@ A SDE eespont'y
Delo Player i's strtegy 5 Ha
tenestategy Sy oF ether players i
UG 5..) 7; (55) Freall 80 is,
sles max ay (5; ,5.{)
et
oS
5
(@
Defe— Phayee Cs Sratgy 5 is « BR]
fore belief P aboor fhe others’ chices if
Eu p) > Euils:, 6) feallse' ic
-
Or = S; selves max
fp Eu; (S;,P)
Example EU, (bp) = peu, Cb, e+
plu, (Lye)
Pactnees hip Game
+ Lageats own firm jointly , Share 50%
profit each
"each agent Chooses effort buel fe pot into
the Fem
Ss £04]
«Fem profit is given by Ws tes%]
“Contin vom of strategies"
Complementary /
syaeegy
£bs b
o sos iy
“pas U5 )2 Lt Ge3,465,5) |
WG. SCAG ts, thes) ]- 5.4
efor
Cost
max 2 (5,75, rb55,)- 5,7
5
ny earndferentiate
c, (2cunb5,)-25) 5
daw BR, BR, fethe cue b=
BR, G,)2 It GS.
Sizes,
SB = itos
Cedster
Open Yale courses
Dr
“2 ov )
ekineRicivatly low effurt , because at the margin
Lenly captvre 4 tre benefit I putin, ot
L absre ay the cost of the effort 77
EXTERNALITY
Sa
Nach Equilibrven —<¢ intersection of lines,
Cin tis yeaph) “py
The pleyers are playi
a best cesponse
fe each other 9 re