Brams, Steven and Kilgour, Marc (2017): Stabilizing unstable outcomes in prediction games.
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Assume in a 2-person game that one player, Predictor (P), does not have a dominant strategy but can predict with probability p > 1/2 the strategy choice of an opponent, Predictee (Q). Q chooses a strategy that maximizes her expected payoff, given that she knows p—but not P’s prediction—and that P will act according to his prediction. In all 2 2 strict ordinal games in which there is a unique Pareto-inferior Nash equilibrium (Class I) or no pure-strategy equilibrium (Class II), and which also has a Pareto-optimal non-Nash “cooperative outcome,” P can induce this outcome if p is sufficiently high. This scenario helps to explain the observed outcomes of a Class I game modeling the 1962 Cuban missile crisis between the United States and the Soviet Union, and a Class II game modeling the 2015 conflict between Iran and Israel over Iran’s possible development of nuclear weapons.
|Item Type:||MPRA Paper|
|Original Title:||Stabilizing unstable outcomes in prediction games|
|Keywords:||Noncooperative games, prediction, Nash equilibrium, 1962 Cuban missile crisis, 2015 Iran-Israel conflict|
|Subjects:||C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory ; Matching Theory
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
|Depositing User:||Steven J. Brams|
|Date Deposited:||20 Mar 2017 16:58|
|Last Modified:||20 Mar 2017 16:59|
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