CAOT 31 Lecture Notes - Lecture 8: Ultimatum Game, Nash Equilibrium, The Evolution Of Cooperation
28 Oct 2020
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Game theory analysis of interaction between rational agents that share common knowledge of rules. Assumes common knowledge of rationality assume rationality of other players. Behavioural game theory study of how people actually behave in interactive situations. = interactions between 2 or more agents, each of whom have 2 or more strategies available (which are associated with payoffs that depend on the action of the other person) Joint defection = nash equilibrium combination of strategies that cannot be improved upon, as long as the other player sticks to the strategy. In reality people cooperate more often than game theory predicts. Best collectively rational strategy is to contribute. Best individual strategy is not to contribute. Player 2 receives allocation & game ends. Purer measure of intrinsic motivation for equal offers. Player 2 accepts/ rejects possible offers before hearing the actual offer. If he/she doesn"t accept, no one gets anything.
