Assurance game, Game Theory

Assurance game Scenario

"Assurance game" may be a generic name for the sport a lot of commonly called "Stag Hunt." The French thinker, Jean Jacques Rousseau, presented the subsequent state of affairs. 2 hunters will either jointly hunt a stag (an adult deer and rather massive meal) or individually hunt a rabbit (tasty, however substantially less filling). searching stags is kind of difficult and needs mutual cooperation. If either hunts a stag alone, the prospect of success is minimal. searching stags is most useful for society however needs lots of trust among its members.


There are 2 pure strategy equilibria. each players like one equilibrium to the opposite - it's each Pareto optimal and Hicks optimal. However, the inefficient equilibrium is a smaller amount risky because the payoff variance over the opposite player's methods is lower. Specifically, one equilibrium is payoff-dominant whereas the opposite is risk-dominant.


Firm 2



Firm 1







General Form

Player 2



Player 1







Where the following relations hold:
a > c >= d > b 
w > x >= z > y


Posted Date: 7/21/2012 4:00:06 AM | Location : United States

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