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lecture 4

The lecture discusses the concept of strict domination in game theory, emphasizing that a strategy strictly dominates another if it yields a better outcome regardless of the opponent's choice. It highlights the Prisoner's Dilemma as an example where strategy C strictly dominates D for both players, leading to a strict dominant strategy equilibrium. Additionally, it notes that many games do not have a strict dominant strategy equilibrium, and if one exists, it is unique.

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2 views

lecture 4

The lecture discusses the concept of strict domination in game theory, emphasizing that a strategy strictly dominates another if it yields a better outcome regardless of the opponent's choice. It highlights the Prisoner's Dilemma as an example where strategy C strictly dominates D for both players, leading to a strict dominant strategy equilibrium. Additionally, it notes that many games do not have a strict dominant strategy equilibrium, and if one exists, it is unique.

Uploaded by

nandini kataria
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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ECO 221: Game Theory

Lecture 4

SNU

27 August, 2024
Belief-free approach: Domination

▶ The idea of domination is probably the strongest possible


prediction of a game.
▶ Dominance is a concept that uses strategies whose
performance is good irrespective of the beliefs.
▶ QUESTION: how do we compare a pair of strategies?
Belief-free approach: Domination

▶ The idea of domination is probably the strongest possible


prediction of a game.
▶ Dominance is a concept that uses strategies whose
performance is good irrespective of the beliefs.
▶ QUESTION: how do we compare a pair of strategies?
Belief-free approach: Domination

▶ The idea of domination is probably the strongest possible


prediction of a game.
▶ Dominance is a concept that uses strategies whose
performance is good irrespective of the beliefs.
▶ QUESTION: how do we compare a pair of strategies?
Strict domination

Player 2
C D
Player 1 C (1, 1) (0, 0)
D (0, 0) (2, 2)

▶ Without forming any belief about what player 2 will choose,


can player 1 compare C and D?
▶ Answer: NO
Strict domination

Player 2
C D
Player 1 C (1, 1) (0, 0)
D (0, 0) (2, 2)

▶ Without forming any belief about what player 2 will choose,


can player 1 compare C and D?
▶ Answer: NO
Strict domination

Player 2
C D
Player 1 C (1, 1) (0, 0)
D (0, 0) (2, 2)

▶ Without forming any belief about what player 2 will choose,


can player 1 compare C and D?
▶ Answer: NO
Strict domination

Definition
Suppose Γ ≡ (N, {Si }i∈N , {ui }i∈N ) is a finite game. A strategy si
for Player i strictly dominates strategy ti if and only if for all
s−i ∈ S−i
ui (si , s−i ) > ui (ti , s−i )

▶ Above gives a straightforward way to check if strategy si


strictly dominates ti or not.
▶ Unfortunately, in many games there may be no strategy that
strictly dominates another strategy.
Strict domination

Definition
Suppose Γ ≡ (N, {Si }i∈N , {ui }i∈N ) is a finite game. A strategy si
for Player i strictly dominates strategy ti if and only if for all
s−i ∈ S−i
ui (si , s−i ) > ui (ti , s−i )

▶ Above gives a straightforward way to check if strategy si


strictly dominates ti or not.
▶ Unfortunately, in many games there may be no strategy that
strictly dominates another strategy.
Strict domination

Definition
Suppose Γ ≡ (N, {Si }i∈N , {ui }i∈N ) is a finite game. A strategy si
for Player i strictly dominates strategy ti if and only if for all
s−i ∈ S−i
ui (si , s−i ) > ui (ti , s−i )

▶ Above gives a straightforward way to check if strategy si


strictly dominates ti or not.
▶ Unfortunately, in many games there may be no strategy that
strictly dominates another strategy.
Strict domination

However, in the Prisoner’s Dilemma game, C strictly dominates D


for Player 1 and C strictly dominates D for Player 2.
Player 2
C D
Player 1 C (1, 1) (3, 0)
D (0, 3) (2, 2)
Strict domination

However, in the Prisoner’s Dilemma game, C strictly dominates D


for Player 1 and C strictly dominates D for Player 2.
Player 2
C D
Player 1 C (1, 1) (3, 0)
D (0, 3) (2, 2)
Strict domination

If there is a game in which there is a single strategy which strictly


dominates every other strategy for a player, then that strategy is
called a strictly dominant strategy.
Definition
A strategy si ∈ Si for Player i is strictly dominant if si strictly
dominates ti for every other strategy ti ∈ Si \ {si }.
In the Prisoner’s Dilemma game, the strategy C is a strictly
dominant strategy for each player.
Strict domination

If there is a game in which there is a single strategy which strictly


dominates every other strategy for a player, then that strategy is
called a strictly dominant strategy.
Definition
A strategy si ∈ Si for Player i is strictly dominant if si strictly
dominates ti for every other strategy ti ∈ Si \ {si }.
In the Prisoner’s Dilemma game, the strategy C is a strictly
dominant strategy for each player.
Strict domination

If there is a game in which there is a single strategy which strictly


dominates every other strategy for a player, then that strategy is
called a strictly dominant strategy.
Definition
A strategy si ∈ Si for Player i is strictly dominant if si strictly
dominates ti for every other strategy ti ∈ Si \ {si }.
In the Prisoner’s Dilemma game, the strategy C is a strictly
dominant strategy for each player.
strict dominant strategy equilibrium

Definition
Suppose Γ ≡ (N, {Si }i∈N , {ui }i∈N ) is a game. The strategy profile
s ∗ ∈ S is a strict dominant strategy equilibrium if si∗ ∈ Si is a strict
dominant strategy for all i ∈ N.
▶ In the Prisoner’s Dilemma game, the strategy profile (C,C) is
the strict dominant strategy equilibrium.
▶ Assumption and prediction: If we assume (a modest amount
of) rationality in players, we must believe that players must
play strictly dominant strategies (whenever they exist).
strict dominant strategy equilibrium

Definition
Suppose Γ ≡ (N, {Si }i∈N , {ui }i∈N ) is a game. The strategy profile
s ∗ ∈ S is a strict dominant strategy equilibrium if si∗ ∈ Si is a strict
dominant strategy for all i ∈ N.
▶ In the Prisoner’s Dilemma game, the strategy profile (C,C) is
the strict dominant strategy equilibrium.
▶ Assumption and prediction: If we assume (a modest amount
of) rationality in players, we must believe that players must
play strictly dominant strategies (whenever they exist).
strict dominant strategy equilibrium

Definition
Suppose Γ ≡ (N, {Si }i∈N , {ui }i∈N ) is a game. The strategy profile
s ∗ ∈ S is a strict dominant strategy equilibrium if si∗ ∈ Si is a strict
dominant strategy for all i ∈ N.
▶ In the Prisoner’s Dilemma game, the strategy profile (C,C) is
the strict dominant strategy equilibrium.
▶ Assumption and prediction: If we assume (a modest amount
of) rationality in players, we must believe that players must
play strictly dominant strategies (whenever they exist).
Many games do not have a strict dominant strategy
equilibrium.

Consider the following game:


Player 2
L C R
Player 1 T (2, 2) (6, 1) (10, 10)
M (1, 3) (5, 5) (9, 2)
B (3, 3) (4, 2) (8, 8)

▶ Notice that for Player 1, T strictly dominates M but T does


not strictly dominate B.
Note: If a game has a strict dominant strategy equilibrium, then it
is unique.
Many games do not have a strict dominant strategy
equilibrium.

Consider the following game:


Player 2
L C R
Player 1 T (2, 2) (6, 1) (10, 10)
M (1, 3) (5, 5) (9, 2)
B (3, 3) (4, 2) (8, 8)

▶ Notice that for Player 1, T strictly dominates M but T does


not strictly dominate B.
Note: If a game has a strict dominant strategy equilibrium, then it
is unique.
Many games do not have a strict dominant strategy
equilibrium.

Consider the following game:


Player 2
L C R
Player 1 T (2, 2) (6, 1) (10, 10)
M (1, 3) (5, 5) (9, 2)
B (3, 3) (4, 2) (8, 8)

▶ Notice that for Player 1, T strictly dominates M but T does


not strictly dominate B.
Note: If a game has a strict dominant strategy equilibrium, then it
is unique.
Many games do not have a strict dominant strategy
equilibrium.

Consider the following game:


Player 2
L C R
Player 1 T (2, 2) (6, 1) (10, 10)
M (1, 3) (5, 5) (9, 2)
B (3, 3) (4, 2) (8, 8)

▶ Notice that for Player 1, T strictly dominates M but T does


not strictly dominate B.
Note: If a game has a strict dominant strategy equilibrium, then it
is unique.

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