ECON 200 Lecture Notes - Lecture 13: Cirque, Nash Equilibrium, Repeated Game
14 Oct 2015
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Document Summary
Economists define games as situations involving at least two people in which they must think strategically. Games are the core of game theory. Game theory: study of how people behave strategically under varying circumstances. Strategic behavior: working to achieve goals by anticipating the interplay between your own and others" decisions. Payoffs in games are the rewards that can come from certain actions. A game of strategy where the two players make rational decisions that end up in a less than ideal result for both people. This definition can be applied to more than two people and to organizations. Suppose you and an accomplice were arrested out of suspicion of committing both a serious and a minor crime. You and your accomplice were locked in different jail cells. A police officer lets you know that he has evidence that both of you committed the minor crime, but not the serious one.
