Lecture 5 - Nash equilibrium: bad fashion and bank runs
recorded by: Yale University
published: Nov. 15, 2010, recorded: September 2007, views: 4399
released under terms of: Creative Commons Attribution No Derivatives (CC-BY-ND)
Report a problem or upload filesIf you have found a problem with this lecture or would like to send us extra material, articles, exercises, etc., please use our ticket system to describe your request and upload the data.
Enter your e-mail into the 'Cc' field, and we will keep you updated with your request's status.
We first define formally the new concept from last time: Nash equilibrium. Then we discuss why we might be interested in Nash equilibrium and how we might find Nash equilibrium in various games. As an example, we play a class investment game to illustrate that there can be many equilibria in social settings, and that societies can fail to coordinate at all or may coordinate on a bad equilibrium. We argue that coordination problems are common in the real world. Finally, we discuss why in such coordination problems--unlike in prisoners' dilemmas--simply communicating may be a remedy.
Strategies and Games: Theory And Practice. (Dutta): Chapter 5
Strategy: An Introduction to Game Theory. (Watson): Chapters 6-9
Thinking Strategically. (Dixit and Nalebuff): Chapter 3, Sections 4-6
Link this pageWould you like to put a link to this lecture on your homepage?
Go ahead! Copy the HTML snippet !