ECON 3M03 Lecture Notes - Lecture 5: Nebraska Highway 14, Matching Pennies, General Motors Ev1

• School: McMaster University
• Department: Economics
• Course: ECON 3M03
• Professor: Olivia Mesta

Document Summary

Gardner chapter 4 part 1 of 2. Outline: mixed strategies, matching pennies game, computing mixed strategy ne, market niche game, computing mixed strategy ne, payoff dominance. Mixed strategies: a pure strategy is the one that does not involve chance. All the strategies we have looked at so far have been pure: a mixed strategy involves chance. When players use non-deterministic or mixed strategies, a player sets probabilities because player does not want to be completely predictable (pitchers in baseball--fastball or off-speed) If at least one player uses a mixed strategy. The solution to the game is a mixed strategy ne. Mathematically, a mixed strategy is a probability distribution over pure/deterministic strategies. Players 1 and 2 in a zero-sum game. Two pure strategies: heads (h) or tails (t) Each player bets a penny, a fixed amount. Rules of the game: if both players use the same strategy there is a match p1 wins and p2 loses, if there is no match.