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If a strictly dominant strategy exists for one player in a game, that player will play that strategy in each of the game's Nash equilibria.If both players have a strictly dominant strategy, the game has only one unique Nash equilibrium, referred to as a "dominant strategy equilibrium".
A prototypical paper on game theory in economics begins by presenting a game that is an abstraction of a particular economic situation. One or more solution concepts are chosen, and the author demonstrates which strategy sets in the presented game are equilibria of the appropriate type.
In game theory and economics, a mechanism is called incentive-compatible (IC) [1]: 415 if every participant can achieve their own best outcome by reporting their true preferences. [ 1 ] : 225 [ 2 ] For example, there is incentive compatibility if high-risk clients are better off in identifying themselves as high-risk to insurance firms , who ...
A social choice rule is dominant strategy incentive compatible, or strategy-proof, if the associated revelation mechanism has the property that honestly reporting the truth is always a dominant strategy for each agent." [2] However, the payments to agents become large, sacrificing budget neutrality to incentive compatibility.
Risk dominance and payoff dominance are two related refinements of the Nash equilibrium (NE) solution concept in game theory, defined by John Harsanyi and Reinhard Selten.A Nash equilibrium is considered payoff dominant if it is Pareto superior to all other Nash equilibria in the game. 1 When faced with a choice among equilibria, all players would agree on the payoff dominant equilibrium since ...
If x is not an SNE, the condition requires that one can move to a different strategy-profile which is a social-welfare-best-response for all coalitions simultaneously. For example, consider a game with two players, with strategy spaces [1/3, 2] and [3/4, 2], which are clearly compact and convex. The utility functions are: u1(x) = - x1 2 + x2 + 1
Equilibrium selection is a concept from game theory which seeks to address reasons for players of a game to select a certain equilibrium over another. The concept is especially relevant in evolutionary game theory, where the different methods of equilibrium selection respond to different ideas of what equilibria will be stable and persistent for one player to play even in the face of ...
Any game that satisfies the following two conditions constitutes a Deadlock game: (1) e>g>a>c and (2) d>h>b>f. These conditions require that d and D be dominant. (d, D) be of mutual benefit, and that one prefer one's opponent play c rather than d. Like the Prisoner's Dilemma, this game has one unique Nash equilibrium: (d, D).