Topic 6

Question 1

Main 3 Game Models

Answer 1

• Prisoner’s Dilemma - simultaneous play, repeated
• Co-ordination Game - simultaneous play, repeated
• Chicken - sequential

Question 2

Prisoner’s Dilemma Payoff Matrix

Answer 2

Dominant Strategy: Cheat

Question 3

Co-ordination Game Payoff Matrix

Answer 3

• No dominant strategy
• 2 Nash Equilibria
• Can get stuck with the lower value

Question 4

Chicken Payoff Matrix

Answer 4

Two conflicting Nash Equalibria, winner and loser

Question 5

How to Calculate the Nash Equilibrium

Answer 5

For Oponents Bill and Bob:
For Bill:

• IF Bob colludes, what is my best strategy?
• IF Bob cheats, what is my best strategy?

For Bob:

• IF Bill colludes, what is my best strategy?
• IF Bill cheats, what is my best strategy?

Question 6

Game Theory: Cheat Response Strategies

Answer 6

• Trigger Strategy - Punish competitor indefinitely if they cheat
• Tit for Tat Strategy - Punish competitor each round until they collude

Question 7

What is a dominant Strategy?

Answer 7

• For Player: If a player has the same strategy regardless of the choice of the other player
• For a Game: If a both players in the game have the same dominant strategy