Economics Game Theory Questions Long
In game theory, there are several types of games that are commonly studied. These games can be classified based on various criteria, such as the number of players, the information available to the players, and the strategies employed by the players. Let's discuss some of the different types of games and provide examples for each.
1. Simultaneous Games: In simultaneous games, players make their decisions simultaneously without knowing the choices made by other players. One classic example is the Prisoner's Dilemma. In this game, two suspects are arrested and held in separate cells. They are given the option to either cooperate with each other by remaining silent or betray each other by confessing. The outcome of the game depends on the choices made by both players.
2. Sequential Games: In sequential games, players make their decisions in a specific order, and each player's decision is influenced by the previous player's choice. An example of a sequential game is the Ultimatum Game. In this game, one player (the proposer) is given a sum of money and must propose a division of the money to the other player (the responder). The responder can either accept or reject the proposal. If the responder rejects the offer, both players receive nothing.
3. Cooperative Games: In cooperative games, players can form coalitions and negotiate agreements to achieve a better outcome for themselves. One example is the Nash Bargaining Game. In this game, two players must agree on how to divide a fixed amount of resources. The players negotiate until they reach a mutually acceptable outcome that maximizes their joint payoff.
4. Non-Cooperative Games: In non-cooperative games, players act independently and do not form coalitions or negotiate. The most well-known example is the Cournot Duopoly Game. In this game, two firms simultaneously decide how much output to produce in a market. Each firm's profit depends on its own output and the output of the other firm. The firms compete with each other to maximize their individual profits.
5. Zero-Sum Games: In zero-sum games, the total payoff is constant, meaning that any gain by one player is offset by an equal loss by another player. An example is the game of Poker. In this game, players compete against each other, and the total amount of money won or lost is always zero. If one player wins, the other player loses an equal amount.
6. Cooperative-Noncooperative Games: In these games, players have the option to cooperate or act non-cooperatively. An example is the Stag Hunt Game. In this game, two hunters can either cooperate to hunt a stag, which yields a higher payoff, or act individually to hunt a hare, which yields a lower payoff. The outcome depends on the choices made by both players.
These are just a few examples of the different types of games in game theory. Each type of game presents unique strategic challenges and can be analyzed using various mathematical models to predict the players' behavior and outcomes.