Lecture 3

Normal Form Games

Concepts to be understood

• 1. Understanding a game written in Normal Form

  2. Best Reponse (or responses) to a given strategy of the opponent.

  3. The concept of a Nash Equiibrium: A pair of strategies such that each is best response to the other.

  4. Figuring out ALL Nash Equiiibria by marking all the best responses in the normal form game.

  5. Strong Nash Equilibrium: Both Best Reponses are UNIQUE best responses to each other. No alternatives exist on either side.

  6. Weak Nash Equilibrium: One Side or the Other has an alternative best response, different from the one in the Nash Equilbrium.

  7. Dominant Strategy: Has better payoff than every other strategy, REGARDLESS of what the other player plays.

  8. Dominated Strategy: For every strategy of opponent, there exists something better than this (dominated) strategy.

  9. Solving games by dominance: Eliminate dominated strategies until you get down to a simpler game, where you can find Nash Equi