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#Post#: 29--------------------------------------------------
Lecture 6, Part II
DIR By: Julia.Wirtz
Date: November 26, 2012, 1:48 pm
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I'm posting a question I got per email and my answer:
Question
I would like to ask you if you could explain the example from
the very beginning of Lecture 6. Part II on 2 by 4 case. I
understand the graphs and why column player plays one strategy
or another. However I don't understand the end of the example
where "p=0 Opt for row (NE)" and the other 5 statements.
Answer
Slide 16 is about checking if you actually have a NE.
The reasoning is like this:
- You have a NE if both players play their best response, given
what the other player does.
- In the graph you have the best responses of the COLUMN
player, given different values of p (the probability of UP for
the ROW player).
- This best responses of the column player is represented by the
FIRST arrow in each statement on slide 16.
- The SECOND arrow is then checking if the assumed value for p
is in turn a best response of the ROW player to the respective
action of the COLUMN player.
- Only if both players are playing best response to each other,
you have a NE
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