Chapter 4
SIMULTANEOUS-MOVE GAMES: DISCRETE STRATEGIES
Games with Simultaneous Moves
➢A game is simultaneous when players choose their actions at exactly the same time.
➢ A game is also simultaneous when players choose their actions in isolation, with no information
about what other players have done or will do.
➢Each player must figure out what others are choosing to do at the same time that the others are
figuring out what she is choosing to do.
Game Tables
➢There is no real distinction between strategy and action in simultaneous-move games.
➢Simultaneous-move games with discrete strategies are most often depicted with the use of a game
table (also called a game matrix or payoff table).
➢The table is called the normal form or the strategic form of the game.
Nash Equilibrium
➢Each player chooser’s best response to the other’s actions (for each action of the other player).
➢A Nash equilibrium, in a game is a list of strategies, one for each player, such that no player can
get a better payoff by switching to some other strategy
that is available to her while all the other players
adhere to the strategies specified for them in the list.
Nash Equilibrium
Note: a Nash equilibrium does not have to be jointly best for the players.
Example: Why bottom, right is not a Nash equilibrium?
However, How can one respond to something that
has not yet happened?
People play simultaneous-move based on their believes.
DOMINANCE
The well-known game of the prisoners’ dilemma:
➢Husband and Wife are players in a two-person, simultaneous-move game in which each has to choose between confessing and not
confessing to the crime of murder
➢Payoffs here are the lengths of the jail sentences associated with each outcome, so low numbers are better for each player.
Suppose the husband believes that the wife will confess.
What is his best choice?
Suppose the husband believes that the wife will deny.
What is his best choice?
The strategy Confess is a dominant strategy or that the strategy Deny is a dominated strategy.
A. Both players have dominant strategies
If both players have dominant strategy, the best choice for each is independent of whether
their beliefs about the other are correct.
Any game with three essential features is labeled as “prisoners’ dilemma.”
➢First, each player has two strategies: to cooperate with one’s rival or to defect from cooperation.
➢Second, each player also has a dominant strategy.
➢Finally, the dominance solution equilibrium is worse for both players than the nonequilibrium situation in which each plays the dominated strategy.
Confess is the dominant strategy for both players. (Confess, Confess) is the outcome predicted for this game and it is a
Nash equilibrium.
B. Only one player has a dominant strategy
➢ One player has a dominant strategy and uses it.
➢ The other player choose her best response based on that.
1. Is there a dominant strategy for players?
2. What is the best response for the player with no dominant strategy?
C. Successive Elimination of Dominated Strategies
In larger games, some of a player’s strategies may be dominated even though
no single strategy dominates all of the others.
Successive or iterated elimination of dominated strategies:
The process of removal of dominated strategies and reduction in the size of a game
until no further reductions can be made.
If the process ends in a unique outcome, then the game is said to be
dominance solvable.
C. Successive Elimination of Dominated Strategies
1. Is there any dominated strategy (the strategy that’s is always worse than one other strategy) for ROW or COLUMN?
2. If so, delete the dominated strategy and rewrite the game.
3. Is there any dominated strategy for ROW or COLUMN?
4. If so, delete the dominated strategy and rewrite the game.
5. Is there any dominated strategy for ROW or COLUMN?
6. ...
The equilibrium outcome is (low, middle).
C. Successive Elimination of Dominated Strategies
Consider a modified version of the game.
Low weakly dominates Bottom.
Low strictly dominates Top.
C. Successive Elimination of Dominated Strategies
WARNING:
Successive elimination of weakly dominated strategies can get rid of some Nash equilibria.
1. Is there any weakly dominated strategy for Rowena or Colin?
2. If so, delete the weakly dominated strategies and rewrite the game.
Dominance solvability then tells us that (Down, Right) is a Nash equilibrium.
But,
What about (Down, Left) and (Up, Right)?
Best-response analysis
Find the best responses of each player to all available strategies of the others.
Best-response analysis is a comprehensive way of locating all possible Nash equilibria of a game.
When best-response analysis of a discrete strategy game does not find a Nash equilibrium,
then the game has no equilibrium in pure strategies.
3 players (The modified version of flower garden creation)
1. Emily, Nina, and Talia, had to choose whether to contribute.
2. The three players make their choices simultaneously.
3. Three contributors will produce the largest and best garden, two contributors will produce a
medium garden, and one contributor will produce a small garden.
3 players (The modified version of flower garden creation)
Is there dominant strategy for any of the players?
Note: Now you must check in both pages of the table to determine whether any player has a dominant
strategy.
What is the Nash equilibrium?
To find the equilibrium
You can use the same methods
as in two players games.
MULTIPLE EQUILIBRIA IN PURE STRATEGIES
Will Harry Meet Sally?
What is the Nash equilibrium? Is it unique?
All that matters is that they coordinate on the same action; it does not matter
which action. That is why the game is said to be one of pure coordination.
MULTIPLE EQUILIBRIA IN PURE STRATEGIES
Will Harry Meet Sally? And Where? (symmetric Payoffs)
What is the Nash equilibrium? Is it unique?
players can get the preferred equilibrium outcome only if each has enough certainty
or assurance that the other is choosing the appropriate action.
For this reason, such games are called assurance games.
MULTIPLE EQUILIBRIA IN PURE STRATEGIES
Will Harry Meet Sally? And Where? (asymmetric Payoffs)
What is the Nash equilibrium? Is it unique?
The risk of coordination failure is greater now.
The two Nash equilibria gives them asymmetric Payoffs.
MULTIPLE EQUILIBRIA IN PURE STRATEGIES
Will James Meet Dean? Chicken
Two teenagers take their cars to opposite ends of Main Street and start to drive toward each other.
The one who swerves to prevent a collision is the “chicken,” and the one who keeps going straight is the winner.
What is the Nash equilibrium? Is it unique?
