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s 20 P l a y i n g U p 10 P l a y i n g L e ft 20P l 1 O u t c o me 8 P l 2 O u t c o me 10Three or Four Important Concepts Dominant Strategy ? One best strategy no matter what your opponent does ? Weakly dominant versus strongly (strictly dominant) strategies Mixed Strategy ? Moves are chosen randomly from the set of pure strategies ? Every simultaneous move game has a Nash equilibrium in mixed strategies Nash equilibrium: When each player is playing a best response to the strategies of the others Beliefs: Probability distribution over strategies of other players Key Terms and Definitions ? Normal form and extensive form ? Nodes (initial, terminal) ? Information sets ? Strategy: plete contingent plan – One for every information set ? Equilibrium: a stability concept ? Welfare ? Pareto optimality: no free lunch Formal Theory: What’s it good for? We have absolutely certain or scientific knowledge only of those subjects of which