Payoff matrix for Advertising game Observations Firm B Don't ● Dominant strategy Advertise advertise for a&bis to advertise Advertise 10.5 15,0 ● Do not worry about Firm the other player Don't Advertise 6,8 10.2 Equilibrium in dominant strategy Game Theory 西南民族大学Side16
Game Theory 西南民族大学 Slide 16 Payoff Matrix for Advertising Game Firm A Advertise Don’t Advertise Advertise Don’t Advertise Firm B 10, 5 15, 0 6, 8 10, 2 ◼ Observations ⚫ Dominant strategy for A & B is to advertise ⚫ Do not worry about the other player ⚫ Equilibrium in dominant strategy
Dominant strategies a Game Without dominant strategy o The optimal decision of a player without a dominant strategy will depend on what the other player does Game Theory 西南民族大学Side17
Game Theory 西南民族大学 Slide 17 Dominant Strategies ◼ Game Without Dominant Strategy ⚫ The optimal decision of a player without a dominant strategy will depend on what the other player does
Modified Advertising Game Firm B Don't Advertise Advertise Advertise 10.5 15,0 Firm A Don't Advertise 6,8 20.2 Game Theory 西南民族大学Side18
Game Theory 西南民族大学 Slide 18 10, 5 15, 0 6, 8 20, 2 Firm A Advertise Don’t Advertise Advertise Don’t Advertise Firm B Modified Advertising Game
Modified Advertising Game ■0 bservations Firm B Don't ●A: No dominant Advertise Advertise strategy, depends on b s actions Advertise 10,5 15,0 ●B: Advertise Firm A Don't Advertise 20.2 ■ Question What should a do? (Hint: consider s decision Game Theory 西南民族大学Side19
Game Theory 西南民族大学 Slide 19 10, 5 15, 0 6, 8 20, 2 Firm A Advertise Don’t Advertise Advertise Don’t Advertise Firm B Modified Advertising Game ◼ Observations ⚫ A: No dominant strategy; depends on B’s actions ⚫ B: Advertise ◼ Question ⚫ What should A do? (Hint: consider B’s decision
The Nash Equilibrium Revisited a Dominant strategies ●“I' m doing the best i can no matter what you do You' re doing the best you can no matter what do Game Theory 西南民族大学Side20
Game Theory 西南民族大学 Slide 20 The Nash Equilibrium Revisited ◼ Dominant Strategies ⚫ “I’m doing the best I can no matter what you do.” ⚫ “You’re doing the best you can no matter what I do