Game Theory Book (Graphs)

Website:
www.matthew-hoelle.com
Matthew Hoelle
Spring 2014
Game Theory
An Advanced
Undergraduate
Course on Game
Theory
Figures
Lunch Trucks at Figure 2.1
the Beach The Political Spectrum
King Webber
Howard Jackson Rose
-1 +1
Website: 2
the Beach Bertrand Duopoly in a 1-mile Town
p1+t*=p2+(1-t*)
Total Cost
p1
p2
t*
0 1
Website: 3
the Beach Lunch Trucks’ Demand
1-0.5n1+0.5n2 n2
Demand
1-n1
A B C D
n1 0.5n1+0.5n2 n2
0 1
Website: 4
One of the Classic Figure 3.5
Blunders Vizzini Best Response
q*
bVizz
0
0 p* 1
Website: 5
Blunders Dread Pirate Roberts Best Response
bDPR
(1/2,1/2)
q*
bVizz
0
0 p* 1
Website: 6
Blunders Rock Paper Scissors Lizard Spock
Website: 7
Know When to Figure 4.1
Hold ‘Em Card Game 1
OR
Website: 8
STAY GO
OR
Website: 9
Website: 10
Hold ‘Em Tic-Tac-Toe Board
1 2 3
4 5 6
7 8 9
Website:
Hold ‘Em Round 1
1 2 3
4 6
7 8 9
Website:
Hold ‘Em Round 2
1 2 3
7 8 9
Website:
Hold ‘Em Round 3
1 2
7 8 9
Website:
Hold ‘Em Round 4
1 2
8 9
Website:
Hold ‘Em Round 5
8 9
Website:
Hold ‘Em Round 6
8 9
Website:
Hold ‘Em Round 7
Website:
Hold ‘Em Backward Induction
Player 1
L R
Player 2 Player 2
LL RR LL RR
(3,1) (1,2) (2,1) (0,0)
Website:
Hold ‘Em Centipede Game 1
Continue Continue Continue Continue (51,50)
Stop
Stop
Stop
Stop
Stop
(1,0) (0,2) (2,1) (50,49) (49,51)
Website:
Stop
Stop
Stop
Stop
Stop
(1,0) (0,2) (2,1) (50,49) (49,51)
Website:
Stop
Stop
Stop
Stop
Stop
(1,0) (0,2) (2,1) (50,49) (49,51)
Website:
Stop
Stop
Stop
Stop
Stop
(1,0) (0,2) (2,1) (50,49) (49,51)
Website:
Hold ‘Em Room Selection Game 1
Roommate 1
123 213
Roommate 2
123 213 123 213
Roommate 3
123 213 123 213 123 213 123 213
20 18
20 18 18 30 24 15 15 20
20 24 24 15 18 30 30 20
Website: 18 15 18 15 30 20
Roommate 1
123 213
Roommate 2
123 213 123 213
Roommate 3
123 213 123 213 123 213 123 213
20 18
20 18 18 30 24 15 15 20
20 24 24 15 18 30 30 20
Website: 18 15 18 15 30 20
Roommate 1
123 213
Roommate 2
123 213 123 213
Roommate 3
123 213 123 213 123 213 123 213
20 18
20 18 18 30 24 15 15 20
20 24 24 15 18 30 30 20
Website: 18 15 18 15 30 20
Roommate 1
123 213
Roommate 2
123 213 123 213
Roommate 3
123 213 123 213 123 213 123 213
20 18
20 18 18 30 24 15 15 20
20 24 24 15 18 30 30 20
Website: 18 15 18 15 30 20
Hold ‘Em Entry Deterrence 1
Store 2
Open Store Don’t Open
Store 1 Store 1
$0.50 $2 $0.50 $2
(-50,50) (50,100) (0,50) (0,200)

Website:
Hold ‘Em Entry Deterrence 2
Store 1
Early No
Store 2 Store 2
Open Don’t Open Don’t

store open store open
Store 1 Store 1 Store 1 Store 1
$0.50 $2 $0.50 $2 $0.50 $2 $0.50 $2
0,-50 -25,50 0,0 150,0 50,-50 100,50 50,0 200,0
Website:
The Strategy of Figure 5.1
Law and Order Information Sets
Website:
Law and Order 4 Subgames
Subgame 1
Subgame 2
Subgame 3 Subgame 4
Website:
Law and Order 2x2 Game with Information Set
Player 1
L R
Player 2 Player 2
LL RR LL RR
(3,1) (1,2) (2,1) (0,0)
Website:
Law and Order Extensive and Normal Form
Player 2
LL RR
Player 1 L (3,1) (1,2)
Player 1
L R R (2,1) (0,0)
Player 2 Player 2
LL RR LL RR
(3,1) (1,2) (2,1) (0,0)

Website:
Law and Order Equivalent Representation
Player 2
LL RR
Player 1
Player 1
L R L R
L R (1,3) (1,2) (2,1) (0,0)
Player 2 Player 2
LL RR LL RR
(3,1) (1,2) (2,1) (0,0)

Website:
Law and Order Finitely Repeated Game
Suspect 1
Mum
Fink
Suspect 2
Suspect 1
Suspect 2
(20,20) … ….. ……. …… …….. ………. ……….. …… (10,10)

Website:
Law and Order The Plea Bargain
prosecutor
Offer x Don’t offer
prosecutor
defendant
Accept Reject
defendant
prosecutor
defendant (1,-3) (3,-4) (-4,3) (2,-2)
(1,-3) (3,-4) (-4,3) (2,-2)

Website:
Law and Order The Plea Bargain Solved
prosecutor
Offer x Don’t offer
prosecutor
defendant
Accept Reject
defendant
prosecutor
defendant (1,-3) (3,-4) (-4,3) (2,-2)
(1,-3) (3,-4) (-4,3) (2,-2)

Website:
Law and Order Law and Order 1
DA
Hire private Don’t hire
investigator
CC
Continue Stop Continue Stop
remodel remodel
DA
Trial No Trial No Trial No Trial No
Trial Trial Trial Trial
V -150 -250 -150 -100 0 -100 0

-1340 10 -100 0 -90 10 -100 0
Website:
DA
investigator
CC
remodel remodel
DA
V -150 -250 -150 -100 0 -100 0

-1340 10 -100 0 -90 10 -100 0
Website:
DA
investigator
CC
remodel remodel
DA
V -150 -250 -150 -100 0 -100 0

-1340 10 -100 0 -90 10 -100 0
Website:
Law and Order Sports Team Exercise
Sports Team
High Offer Low Offer
Athlete
Accept Reject Accept Reject
(15,80) (0,0) (80,15) (0,0)
Website:
Repeated Figure 6.1
Interaction Infinitely Repeated Prisoners’ Dilemma
Equilibrium Path
(Mum, Mum) (Mum, Mum) (Mum, Mum)
Player 1
10 10 10
payoffs
Website:
Repeated Figure 6.2
Interaction Grim Trigger
Equilibrium Path
(Mum, Mum) (Mum, Mum) (Mum, Mum)
Instance of deviation
Off the
Equilibrium Path (Fink, Mum) (Fink, Fink)
Player 1
20 5
payoffs
Website:
Repeated Figure 6.3
Interaction Tit-for-tat Level 1
Equilibrium Path
(Mum, Mum) (Mum, Mum) (Mum, Mum) (Mum, Mum)
First instance
Off the of deviation
Equilibrium Path
(Fink, Mum) (Mum, Fink) (Fink, Mum)
Player 1
20 0 20
payoffs
Website:
Repeated Figure 6.4
Interaction Tit-for-tat Level 2
Equilibrium Path
First instance
Off the of deviation
Equilibrium Path
(Fink, Mum) (Mum, Fink) (Fink, Mum)
Second instance
Off the off the of deviation
Equilibrium Path
(Fink, Fink) (Fink, Fink)
Player 1 5 5
Website:
www.matthew-hoelle.com payoffs
Repeated Figure 6.5
Interaction k-Period Punishment
Equilibrium Path k+1 periods

Instance of
Off the deviation
Equilibrium Path k periods
(Fink, Mum) (Fink, Fink) (Fink, Fink)
Player 1
20 5 5
payoffs
Website:
Forming Beliefs Figure 8.1
ahead of a Date Information and Beliefs 1
T (2,1)
Player 1
D1 D2
Player 2 [p] [1-p]
L R L R
(2,1) (1,2) (3,2) (0,1)
Website:
ahead of a Date Information and Beliefs 2
T (2,1)
Player 1
D1 D2
Player 2 [p] [1-p]
L R L R
(2,1) (1,0) (3,2) (0,1)
Website:
ahead of a Date Date Night Game
Woman
Fish Pasta Salad

Meat
Man [p] [1-p] [q] [1-q]
White White White White

Red Red Red Red
(2,3) (6,4) (4,3) (1,2) (3,6) (1,2) (2,0) (5,3)
Website:
ahead of a Date Selten’s Horse Exercise
Player 1 C Player 2 c
(1,1,1)
D d
Player 3 [p] [1-p]
L R L R
(3,3,2) (0,0,0) (4,4,0) (0,0,1)
Website:
ahead of a Date Father-Son Gift Giving Exercise
Father
Lego Video
Nerf game
set gun
Son [p] [1-p]
Behave Not Behave Not Behave Not
(4,3) (1,2) (4,0) (2,2) (4,1) (3,2)

Website:
Beer or Quiche? Figure 9.1
Signaling: Beer-Quiche 1
Nature (no payoffs)

Tough guy (50%) Wimp (50%)
Student
Bully
(0,1) (3,0) (1,2) (2,0) (1,0) (2,2) (0,0) (3,1)

Website:
Signaling: Beer-Quiche 2
(0,1) (1,2)
Tough Guy
Beer Quiche
(3,0) 0.5 (2,0)
Bully Bully
(1,0) 0.5 (0,0)
Beer Quiche
Wimp
(2,2)
(3,1)
Website:
Insurance: Complete Information
8
High risk indifference curve
6
Accident Consumption
Low risk indifference curve

4 (complete information)
45 deg line
0
0 1 2 3 4 5 6 7 8 9 10
No Accident Consumption
Website:
Insurance: Asymmetric Information
8
High risk indifference curve
6
Accident Consumption
(complete information)

(asymmetric information)
45 deg line
0
0 1 2 3 4 5 6 7 8 9 10
No Accident Consumption
Website:
Beer-Quiche Exercise 1
(0,1) (1,1)
Tough Guy
Beer Quiche
(3,0) 0.5 (2,0)
Bully Bully
(1,0) 0.5 (0,0)
Beer Quiche
Wimp
(2,2)
(3,2)
Website:
Beer-Quiche Exercise 2
(2.5,1) (1,2)
Tough Guy
Beer Quiche
(3,0) 0.5 (2,0)
Bully Bully
(1,0) 0.5 (0,0)
Beer Quiche
Wimp
(2,2)
(3,1)
Website:
Incentives in Figure 10.1
Contracts Moral Hazard
High effort indifference
4 Low effort indifference

w(10)
45-degree line
0
0 2 4 6 8 10
w(1)
Website:
Chapter 5 Figure A.1
Solutions Sports Team Solution
Sports Team
High Offer Low Offer
Athlete
Accept Reject Accept Reject
(15,80) (0,0) (80,15) (0,0)
Website:
Solutions College Exercise 1
(6,1) (10,1)
High ability
College No College
(-3,0) 0.5 (1,0)
Firm Firm
(2,0) 0.5 (10,0)
College No College
Low ability
(-7,1)
(1,1)
Website:
Solutions College Exercise 2
(5,1) (10,1)
High ability
College No College
(-4,0) 0.5 (1,0)
Firm Firm
(0,0) 0.5 (10,0)
College No College
Low ability
(-9,1)
(1,1)
Website:

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Game Theory Book (Graphs)

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Howard Jackson Rose

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

Continue Continue Continue Continue (51,50)

Continue Continue Continue Continue (51,50)

Continue Continue Continue Continue (51,50)

Continue Continue Continue Continue (51,50)

123 213 123 213

123 213 123 213 123 213 123 213

123 213 123 213

123 213 123 213 123 213 123 213

123 213 123 213

123 213 123 213 123 213 123 213

123 213 123 213

123 213 123 213 123 213 123 213

Open Store Don’t Open

(-50,50) (50,100) (0,50) (0,200)

Open Don’t Open Don’t

$0.50 $2 $0.50 $2 $0.50 $2 $0.50 $2

0,-50 -25,50 0,0 150,0 50,-50 100,50 50,0 200,0

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

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

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

(20,20) … ….. ……. …… …….. ………. ……….. …… (10,10)

defendant (1,-3) (3,-4) (-4,3) (2,-2)

(1,-3) (3,-4) (-4,3) (2,-2)

defendant (1,-3) (3,-4) (-4,3) (2,-2)

(1,-3) (3,-4) (-4,3) (2,-2)

V -150 -250 -150 -100 0 -100 0

V -150 -250 -150 -100 0 -100 0

V -150 -250 -150 -100 0 -100 0

High Offer Low Offer

Accept Reject Accept Reject

(15,80) (0,0) (80,15) (0,0)

(Mum, Mum) (Mum, Mum) (Mum, Mum)

(Mum, Mum) (Mum, Mum) (Mum, Mum)

Equilibrium Path k+1 periods

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

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

Fish Pasta Salad

White White White White

(2,3) (6,4) (4,3) (1,2) (3,6) (1,2) (2,0) (5,3)

(3,3,2) (0,0,0) (4,4,0) (0,0,1)

(4,3) (1,2) (4,0) (2,2) (4,1) (3,2)

Nature (no payoffs)

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

Low risk indifference curve

Low risk indifference curve

High effort indifference

4 Low effort indifference

High Offer Low Offer

Accept Reject Accept Reject

(15,80) (0,0) (80,15) (0,0)

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