Category: Micro-Game-Theory

  Description This video shows how repeated games work. By using the prisoner's dilemma, we analyse how repeated games might have different results depending on whether they have a finite or infinite number of repetitions. - In game theory, repeated games, also known as supergames, are those that play out over and over for a period of time, and therefore are usually represented using the extensive form. As opposed to one-shot games, repeated games introduce a new series of incentives: the p...

  Description This video shows how to look for a subgame perfect equilibrium. We start by explaining what subgames are, then look for a Nash equilibrium, and finally look for the subgame equilibrium. - In game theory, a subgame is a subset of any game that includes an initial node (which has to be independent from any information set) and all its successor nodes. It’s quite easy to understand how subgames work using the extensive form when describing the game. A subgame-perfect equilibrium ...

  Description This video shows how mixed strategies work. By using mixed strategies, we will be able to understand how to solve the game known as battle of the sexes. - Mixed strategies need to be analysed in game theory when there are many possible equilibria, which is especially the case for coordination games. The battle of the sexes is a common example of a coordination game where two Nash equilibria appear, meaning that no real equilibrium can be reached. In the battle of the sexes, a ...

  Description This video explains how the battle of the sexes work. We explain how, by searching for a Nash equilibrium, we won't be able to solve the game. - In the battle of the sexes, a couple argues over what to do over the weekend. Both know that they want to spend the weekend together, but they cannot agree over what to do. The man prefers to go watch a boxing match, whereas the woman wants to go shopping. This is a classical example of a coordination game, analysed in game theory for...

  Description This video explains how dominant strategies work, and how to reach a Nash equilibrium. We start by analysing dominant strategies, then explain what the Nash equilibrium is. Finally, we show an example of elimination of dominated strategies. - Nash equilibria are defined as the combination of strategies in a game in such a way, that there is no incentive for players to deviate from their choice. This is the best option a player can make, taking into account the other players’ d...

  Description This video shows how the Battle of the Bismarck Sea works. We start by explaining the military operation, and then see all possible outcomes. Finally, we analyse the game using a game matrix. - The Battle of the Bismarck Sea was a battle fought in February 1943 in Southeast Asia during World War II, between the Japanese Navy and the US Air Force. In game theory, its modeling was done by O. G. Haywood, Jr. in his article “Military Decision and Game Theory”, 1954. It’s a game us...

  Description This video explains how the prisoner's dilemma game works. We start by explaining the prisoners' situation, then we see how to solve the game, and analyse its consequences. - The prisoner’s dilemma is probably the most widely used game in game theory. Its use has transcended Economics, being used in fields such as business management, psychology or biology, to name a few. Nicknamed in 1950 by Albert W. Tucker, who developed it from earlier works, it describes a situation where...

  Description This video explains what the extensive form is. We start by learning how to build a game tree to analyse games, and then use a couple of examples to see how to use it. - In game theory, the extensive form is a way of describing a game using a game tree. It’s simply a diagram that shows that choices are made at different points in time (corresponding to each node). The payoffs are represented at the end of each branch. Since the extensive form represents decisions at different ...

  Description This video explains what the strategic form is. We start by learning how to build a matrix to analyse games, and then use a couple of examples to see how to use it. - In game theory, the strategic form (or normal form) is a way of describing a game using a matrix. The game is defined by exhibiting on each side of the matrix the different players, each strategy or choice they can make, and sets of payoffs they will each receive for a given strategy. The strategic form allows us...