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June 11, 2021 73347 Game TheoryLecture 16 1 Dynamic Games of Complete Information Dynamic Games of Complete and Imperfect Information June 11, 2021 73347 Game TheoryLecture 16 2 Outline of dynamic games of plete information ? Dynamic games of plete information ? Extensiveform representation ? Dynamic games of plete and perfect information ? Game tree ? Subgameperfect Nash equilibrium ? Backward induction ? Applications ? Dynamic games of plete and imperfect information ? More applications ? Repeated games June 11, 2021 73347 Game TheoryLecture 16 3 Today’s Agenda ? Review of previous class ? Game tree representing imperfect information ? Subgame ? Subgameperfect Nash equilibrium ? Backward induction June 11, 2021 73347 Game TheoryLecture 16 4 Dynamic (or sequentialmove) games of plete information ? A set of players ? Who moves when and what action choices are available? ? What do players know when they move? ?Players’ payoffs are determined by their choices. ? All these are mon knowledge among the players. June 11, 2021 73347 Game TheoryLecture 16 5 Definition: extensiveform representation ? The extensiveform representation of a game specifies: ? the players in the game ? when each player has the move ? what each player can do at each of his or her opportunities to move ? what each player knows at each of his or her opportunities to move ? the payoff received by each player for each bination of moves that could be chosen by the players June 11, 2021 73347 Game TheoryLecture 16 6 Dynamic games of plete and perfect information ? Perfect information ? All previous moves are observed before the next move is chosen. ? A player knows Who has made What choices when she has an opportunity to make a choice June 11, 2021 73347 Game TheoryLecture 16 7 Perfect information: illustration (sequential matching pennies) ? Each of the two players has a penny. ? Player 1 first chooses whether to show the Head or the Tail. ? After observing play