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In game theory, the Nash equilibrium is the most commonly-used solution concept for non-cooperative games. A Nash equilibrium is a situation where no player could gain by changing their own strategy. The idea of Nash equilibrium dates back to the time of Cournot, who in 1838 applied it to his model of competition in an oligopoly.
In physics, Loschmidt's paradox, also known as the reversibility paradox, irreversibility paradox, or Umkehreinwand, is the objection that it should not be possible to deduce an irreversible process from time-symmetric dynamics. This puts the time reversal symmetry of (almost) all known low-level fundamental physical processes at odds with any attempt to infer from them the second law of thermodynamics which describes the behaviour of macroscopic systems. Both of these are well-accepted principles in physics, with sound observational and theoretical support, yet they seem to be in conflict, hence the paradox.
A coordination game is a type of simultaneous game found in game theory. It describes the situation where a player will earn a higher payoff when they select the same course of action as another player. The game is not one of pure conflict, which results in multiple pure strategy Nash equilibria in which players choose matching strategies. Figure 1 shows a 2-player example.
In game theory, cheap talk is communication between players that does not directly affect the payoffs of the game. Providing and receiving information is free. This is in contrast to signalling, in which sending certain messages may be costly for the sender depending on the state of the world.
In game theory, a signaling game is a simple type of a dynamic Bayesian game.
In game theory, a player's strategy is any of the options which they choose in a setting where the optimal outcome depends not only on their own actions but on the actions of others. The discipline mainly concerns the action of a player in a game affecting the behavior or actions of other players. Some examples of "games" include chess, bridge, poker, monopoly, diplomacy or battleship. A player's strategy will determine the action which the player will take at any stage of the game. In studying game theory, economists enlist a more rational lens in analyzing decisions rather than the psychological or sociological perspectives taken when analyzing relationships between decisions of two or more parties in different disciplines.
Parallel tempering, in physics and statistics, is a computer simulation method typically used to find the lowest energy state of a system of many interacting particles. It addresses the problem that at high temperatures, one may have a stable state different from low temperature, whereas simulations at low temperatures may become "stuck" in a metastable state. It does this by using the fact that the high temperature simulation may visit states typical of both stable and metastable low temperature states.
In game theory, a solution concept is a formal rule for predicting how a game will be played. These predictions are called "solutions", and describe which strategies will be adopted by players and, therefore, the result of the game. The most commonly used solution concepts are equilibrium concepts, most famously Nash equilibrium.
In game theory, an extensive-form game is a specification of a game allowing for the explicit representation of a number of key aspects, like the sequencing of players' possible moves, their choices at every decision point, the information each player has about the other player's moves when they make a decision, and their payoffs for all possible game outcomes. Extensive-form games also allow for the representation of incomplete information in the form of chance events modeled as "moves by nature". Extensive-form representations differ from normal-form in that they provide a more complete description of the game in question, whereas normal-form simply boils down the game into a payoff matrix.
In game theory, a Perfect Bayesian Equilibrium (PBE) is a solution with Bayesian probability to a turn-based game with incomplete information. More specifically, it is an equilibrium concept that uses Bayesian updating to describe player behavior in dynamic games with incomplete information. Perfect Bayesian equilibria are used to solve the outcome of games where players take turns but are unsure of the "type" of their opponent, which occurs when players don't know their opponent's preference between individual moves. A classic example of a dynamic game with types is a war game where the player is unsure whether their opponent is a risk-taking "hawk" type or a pacifistic "dove" type. Perfect Bayesian Equilibria are a refinement of Bayesian Nash equilibrium (BNE), which is a solution concept with Bayesian probability for non-turn-based games.
In game theory, a Bayesian game is a strategic decision-making model which assumes players have incomplete information. Players hold private information relevant to the game, meaning that the payoffs are not common knowledge. Bayesian games model the outcome of player interactions using aspects of Bayesian probability. They are notable because they allowed, for the first time in game theory, for the specification of the solutions to games with incomplete information.
Backward induction is the process of determining a sequence of optimal choices by reasoning from the end point of a problem or situation back to its beginning via individual events or actions. Backward induction involves examining the final point in a series of decisions and identifying the most optimal process or action required to arrive at that point. This process continues backward until the best action for every possible point along the sequence is determined. Backward induction was first utilized in 1875 by Arthur Cayley, who discovered the method while attempting to solve the secretary problem.
In statistical hypothesis testing, a type I error, or a false positive, is the rejection of the null hypothesis when it is actually true. For example, an innocent person may be convicted. A type II error, or a false negative, is the failure to reject a null hypothesis that is actually false. For example: a guilty person may be not convicted.
Risk dominance and payoff dominance are two related refinements of the Nash equilibrium (NE) solution concept in game theory, defined by John Harsanyi and Reinhard Selten. A Nash equilibrium is considered payoff dominant if it is Pareto superior to all other Nash equilibria in the game.1 When faced with a choice among equilibria, all players would agree on the payoff dominant equilibrium since it offers to each player at least as much payoff as the other Nash equilibria. Conversely, a Nash equilibrium is considered risk dominant if it has the largest basin of attraction. This implies that the more uncertainty players have about the actions of the other player(s), the more likely they will choose the strategy corresponding to it.
In game theory, the traveler's dilemma is a non-zero-sum game in which each player proposes a payoff. The lower of the two proposals wins; the lowball player receives the lowball payoff plus a small bonus, and the highball player receives the same lowball payoff, minus a small penalty. Surprisingly, the Nash equilibrium is for both players to aggressively lowball. The traveler's dilemma is notable in that naive play appears to outperform the Nash equilibrium; this apparent paradox also appears in the centipede game and the finitely-iterated prisoner's dilemma.
The intuitive criterion is a technique for equilibrium refinement in signaling games. It aims to reduce possible outcome scenarios by restricting the possible sender types to types who could obtain higher utility levels by deviating to off-the-equilibrium messages, and to types for which the off-the-equilibrium message is not equilibrium dominated.
Jean-François Mertens was a Belgian game theorist and mathematical economist.
PhoneDog v. Kravitz, No. 11-03474, was a case in the United States District Court for the Northern District of California about whether Twitter accounts and their passwords could be company property or trade secrets. In this case a mobile device news website PhoneDog sued Noah Kravitz, its former employee, after Kravitz refused to turn over password information for the Twitter account he developed and cultivated during his employment. When Kravitz asked the court to dismiss this case, the court held that Twitter accounts and their passwords could constitute trade secrets and that failure on behalf of the employee to relinquish an account could constitute misuse of a trade secret or "trade secret misappropriation." This case is often cited in arguments for the importance of including clauses about social media account ownership in employment contracts.
Behavioral game theory seeks to examine how people's strategic decision-making behavior is shaped by social preferences, social utility and other psychological factors. Behavioral game theory analyzes interactive strategic decisions and behavior using the methods of game theory, experimental economics, and experimental psychology. Experiments include testing deviations from typical simplifications of economic theory such as the independence axiom and neglect of altruism, fairness, and framing effects. As a research program, the subject is a development of the last three decades.
Philp v Ryan & Anor [2004] IESC 105 is an Irish tort law case concerning the actionability of the 'loss of chance' doctrine in medical negligence. Contrary to the position in England and Wales consolidated in Gregg v Scott, the Supreme Court of Ireland awarded compensation to the plaintiff for their loss of life expectancy caused by the defendant's negligence, despite the lack of proof on the balance of probabilities that Mr Philp would have otherwise recovered.
References
- ↑ Banks, Jeffrey, and Joel Sobel, 1987, "Equilibrium selection in signaling games", Econometrica, 55(3), 647-661.
- ↑ The Intuitive and Divinity Criterion: Interpretation and Step-by-Step Examples Felix Munoz-Garcia, Ana Espinola-Arredondo, Journal of Industrial Organization Education. Volume 5, Issue 1, Pages 1–20, ISSN (Online) 1935-5041, DOI: 10.2202/1935-5041.1024, March 2011