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Questions and Answers
What does the definition of Nash equilibrium not require?
What does the definition of Nash equilibrium not require?
- Players to have complete knowledge of others' actions
- Equilibrium choices to be strictly better than other available choices
- Players to always make inspired guesses
- Joint best choices for the players (correct)
In a Nash equilibrium, how do players make their choices?
In a Nash equilibrium, how do players make their choices?
- By making blind guesses
- By observing others' actions before deciding
- Based on actual knowledge of others' actions
- By choosing their 'best response' to the other's choice (correct)
How do players in simultaneous-move games try to figure out what others are doing?
How do players in simultaneous-move games try to figure out what others are doing?
- By making inspired blind guesses
- By having complete certainty about others' actions
- By knowing in advance all actions of others
- Using experience and observation (correct)
What is one method players can use to predict others' actions in games?
What is one method players can use to predict others' actions in games?
What concept was introduced to account for uncertainty in players' actions?
What concept was introduced to account for uncertainty in players' actions?
Why might choices that are not best for a player be unlikely to persist for long?
Why might choices that are not best for a player be unlikely to persist for long?
What must happen in a Nash equilibrium for each player to make their 'best response'?
What must happen in a Nash equilibrium for each player to make their 'best response'?
What is one of the key aspects of defining Nash equilibrium as per the text?
What is one of the key aspects of defining Nash equilibrium as per the text?
Why is the concept of 'best response' no longer flawed when defining Nash equilibrium?
Why is the concept of 'best response' no longer flawed when defining Nash equilibrium?
How does allowing mixed strategies impact the interpretation of randomness in a player's strategy according to the text?
How does allowing mixed strategies impact the interpretation of randomness in a player's strategy according to the text?
In Nash equilibrium, what does each player's strategy represent?
In Nash equilibrium, what does each player's strategy represent?
How do correct beliefs about others' strategies contribute to Nash equilibrium?
How do correct beliefs about others' strategies contribute to Nash equilibrium?
Which benefit arises from allowing mixed strategies in Nash equilibrium, as mentioned in the text?
Which benefit arises from allowing mixed strategies in Nash equilibrium, as mentioned in the text?
Why does Nash equilibrium involve ensuring each player's strategy is optimal given their beliefs?
Why does Nash equilibrium involve ensuring each player's strategy is optimal given their beliefs?
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Study Notes
Nash Equilibrium
- A Nash equilibrium does not require equilibrium choices to be strictly better than other available choices.
- In a Nash equilibrium, each player chooses their "best response" to the other's choice, but the two choices are made simultaneously.
Overcoming Strategic Uncertainty
- Players can use experience and observation to develop a pretty good idea of what the others do in simultaneous-move games.
- Players can also use logical process of thinking through the others' thinking to overcome strategic uncertainty.
Alternative Definition of Nash Equilibrium
- A Nash equilibrium is a set of strategies, one for each player, such that:
- Each player has correct beliefs about the strategies of the others.
- The strategy of each is the best for herself, given her beliefs about the strategies of the others.
Advantages of Alternative Definition
- The concept of "best response" is no longer logically flawed, as each player is choosing their best response to their own beliefs about the others' actions.
- In mixed strategies, the randomness in one player's strategy may be better interpreted as uncertainty in the other players' beliefs about this player's action.
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