Summary ECO2007 Module 2

MODULE 2.1: SIMULATENOUS-MOVE GAMES

By the end of this module, you should be able to:

 Define and provide examples of simultaneous move games
 Identify players, strategies, payoffs in a game table
 Define and solve for the Nash Equilibrium




Introduction

What are simultaneous move games?

 Simultaneous move games occur when:
- Players move with no knowledge of what their opponent has chosen to do
- Players choose their action at the exact same time
- Players make choices in isolation

- THEREFORE: these games have imperfect information


Simultaneous move games with discrete strategies


Game table

 Simultaneous move games are depicted with a

, “game table” or “game matrix” or “payoff table”


 Each cell represents the payoffs for each player, for each outcome, under the
strategies




 The game table is called the normal form or strategic form of the game
 It can include any number of strategies, as long as it is reflected in the dimensions of
the table.


Game table: payoffs

 Each cell represents the payoff to a player if he had taken that strategy
 for example, suppose Ron chose to stun and Harry chose to attack
 then Ron would receive a payoff of 4
 and Harry would receive a payoff of 6