Assurance game scenario, Game Theory

"Assurance game" is a general name for the game more commonly known as "Stag Hunt." The French philosopher, Jean Jacques Rousseau, presented the subsequent circumstances. Two hunters can moreover jointly hunt a stag (an adult deer and quite large meal) or individually hunt a rabbit (tasty, but significantly less filling). Hunting stags is quite difficult and need mutual cooperation. If either hunts a stag alone, the chance of victory is negligible. Hunting stags is most advantageous for society but needs a ample of trust amid its members.

Description

 

There are two pure policy equilibria. Both players favor one equilibrium to the other - it is both Pareto optimal and Hicks optimal. However, the incompetent equilibrium is less risky as the payoff variance over the other player's strategies is lower. Specifically, one equilibrium is payoff-dominant while the other is risk-dominant.

Example


Firm 2

 



invest

don't

Firm 1

invest

10,10

-50,0

don't

0,-50

0,0

General Form



Player 2



L

R

Player 1

U

I,V

II,VI

D

III,VII

IV,VIII

Where the following relations hold:
I> III >= IV > II 
V > VI >= VIII> VII

 

Posted Date: 7/21/2012 5:23:01 AM | Location : United States







Related Discussions:- Assurance game scenario, Assignment Help, Ask Question on Assurance game scenario, Get Answer, Expert's Help, Assurance game scenario Discussions

Write discussion on Assurance game scenario
Your posts are moderated
Related Questions
Two individuals, Player 1 and Player 2, are competing in an auction to obtain a valuable object. Each player bids in a sealed envelope, without knowing the bid of the other player.

Two individuals use a common resource (a river or a forest, for example) to produce output. The more the resource is used, the less output any given individual can produce. Denote

In many cases we are interested in only one (or a few) of the equations of the model and attempts to measure its parameters statistically without a complete knowledge of the entire

Game Theory has evolved since its origins as an idea exercise for educational mathematicians. Taught in prime business faculties, economics departments, and even military academies

what are the theories of financial crisis

In econometric theory two possibie situations of identifiability can arise: Equation under,consideration is identified or not identified: 1) Equation is under-identified-

GAME 1 Claim a Pile of Dimes Two players Aand B are chosen. The instructor places a dime on the table. Player A can say Stop or Pass. If Stop, then A gets the dime and the gam

Consider the electoral competition game presented in Lecture 6. In this game there are two candidates who simultaneously choose policies from the real line. There is a distribution

A heuristic is an aid to learning, casually brought up as a rule of thumb. Formally, a heuristic may be a mechanism capable of altering its internal model of the surroundings in re

Games with Sequential Moves Most students find the idea of rollback very simple and natural, even without drawing or understanding trees. Of course, they start by being able to