Executive summary: Subgame-perfect Nash Equilibrium in extensive-form games requires rational best responses at each decision point, but real-world behavior often deviates due to fairness considerations and social preferences.
Key points:
Normal-form games involve simultaneous decisions, while extensive-form games have sequential decisions represented by game trees.
Subgame-perfect Nash Equilibrium occurs when each decision point (subgame) represents a Nash Equilibrium.
The Ultimatum Game illustrates subgame perfection, with a theoretical optimal strategy of offering the smallest amount possible.
Behavioral studies show people often reject unfair offers, contradicting purely rational self-interest assumptions.
In repeated games, considering opponents’ interests becomes part of rational self-interest, leading to fairer offers.
Understanding subgame perfection requires viewing payoffs in absolute rather than relative terms.
This comment was auto-generated by the EA Forum Team. Feel free to point out issues with this summary by replying to the comment, andcontact us if you have feedback.
Executive summary: Subgame-perfect Nash Equilibrium in extensive-form games requires rational best responses at each decision point, but real-world behavior often deviates due to fairness considerations and social preferences.
Key points:
Normal-form games involve simultaneous decisions, while extensive-form games have sequential decisions represented by game trees.
Subgame-perfect Nash Equilibrium occurs when each decision point (subgame) represents a Nash Equilibrium.
The Ultimatum Game illustrates subgame perfection, with a theoretical optimal strategy of offering the smallest amount possible.
Behavioral studies show people often reject unfair offers, contradicting purely rational self-interest assumptions.
In repeated games, considering opponents’ interests becomes part of rational self-interest, leading to fairer offers.
Understanding subgame perfection requires viewing payoffs in absolute rather than relative terms.
This comment was auto-generated by the EA Forum Team. Feel free to point out issues with this summary by replying to the comment, and contact us if you have feedback.