PUP-3002 Lecture Notes - Lecture 2: Nash Equilibrium, Perfect Competition, Decision Theory
Document Summary
A necessary condition is one that is necessary for something else to occur: Y does not happen unless x is present. If x is not present, y will not happen. But, if x is present, y may or may not happen. A sufficient condition is one in the presence of which something else will always occur. Ex: when it rains there will be puddles, but a puddle doesn"t always equate to rain. Ex: when there is fire, there is smoke. Social science tends to deal with probabilistic relationships. Goal is to explain how the choices that rational individuals make are shaped by the policy context and rules that characterize the rule-making environment. Includes all actors involved in the decision making process. *cooperation is a dominant strategy, yet often times individuals don"t want to cooperate* A mathematical tool to study strategic decision making. Externally determined - the actor"s decisions have no impact on exogenous factors.
