Intro to Game Theory and the Dominant Strategy Equilibrium

[@rosemaryb6733]

I am a doctoral education student in a decision making class- I read an article by Raiffa and he referenced game theory. I really appreciate this basic but essential lesson. thanks

[@lindakovler504]

I just watched all 4 of your videos and they are great! I have a Game Theory exam tomorrow and had missed the original class on subgame perfect NE and nobody until now from my class had been able to explain clearly to me. Thank you so much - you have real talent!

[@GarrettPetersen]

Linda Kovler Glad to hear it!

[@saasda6255]

Did you pass

[@MrBish435]

Okay let me summarise: 1. Everyone in the game will do what is best for themselves. 2. You have to anticipate what the other player will do for you to make a counteractive move. 3. Each player's actions will be influenced by how the other player moves or acts. eg. If I'm in the oil business: 1. My competitors will always try to maximise or increase their profit either by increase volume when prices are high or cut prices when there's an oversupply. 2. If I decide to keep my price of oil high and sell at that high price. The competitor will undercut my price to steal away profits. 3. So, in response to my competitor, I will match their oil price. If I do match the price cut of oil "I'll be in equilibrium" if I lower my price more than my competitor I will lose more money than if I had just matched the price cut.

[@chobzter]

Thank you

[@czure94]

This was used in my Poli sci class to help illustrate the cause of World War 1. Thank you lol

[@ninmachine109]

This subject is an ADD nightmare, thanks for uploading!

[@karyngeorgilis4110]

I'm a design major in the middle of an econ class, this was extremely helpful!

[@danieljenkins708]

same

[@GCowner]

i have a real life example of this. I was contemplating taking someone to HR at work, and I knew that the other person had been talking about taking me to HR. I was too busy and scared so I didn't take her to HR, and she took me to HR. I got absolutely screwed, even though I did not do anything remotely wrong as she had done (sexual harassment, telling me I need to get laid, bullying, etc.). So I should have, according to game theory dominant strategy, taken her to HR. That way it would have cancelled out. I got the book thrown at me. Damn it...wish I saw this video last year :(

[@smartcatcollarproject5699]

Those damn narcissists are everywhere ! You need to expose her game !

[@ayaatabualsaud7574]

still dont get it

[@sadavar3746]

@@ledgerarmani2979 WOW IT REALLY WORKS GUYS

[@carboncompounds9377]

Lemme give you 1 simple example:- 1)Suppose A and B factories make candies. 2)When both companies don't advertise, each brand sells equal no. of candies. 3)Lets say Advertising costs 10% of original profit but gives extra sales by 50%. 4) Thus both companies advertise which reduces their profits by 10% and give no increase in sales as both advertisements cancel out other's effect.

[@carboncompounds9377]

Thus both companies end up having reduced profits.

[@Palar47]

Which part, why it's better off for both of the prisoners to testify, or why that's an example of dominant theory equilibrium?

[@p1nesap]

@3:46 would be insightful to point out that despite player 2 "beating" player 1, both players benefit most (ie. just defeating opponent isn't always the optimal goal, just as losing is not always a bad thing). In other words, producing the highest outcome for _both_ players is optimal. And the bongos sound like annoying kitchen drawers shutting.

[@sreetamaray_]

The explanation is lucid and precise.Thank you for making this video :)

[@AshtonKutch33]

A mixed nash equilibrium is like watching cars trying to maneuver past each other eventually its going to turn into a game but as you would expect people would be trying to find ways to get past but at the most complex level of the game people will need to make maneuvers that wont risk getting hit but getting by.

[@DaWranglerGuy]

Thanks for the video! I am about to start off the new school year with a Game Theory course and this gave me a great introduction.

[@emmettjulius7888]

you prolly dont give a shit but does anybody know a tool to get back into an Instagram account? I was dumb lost my account password. I appreciate any help you can give me.

[@jaxxonvivaan5249]

@Emmett Julius Instablaster :)

[@emmettjulius7888]

@Jaxxon Vivaan Thanks so much for your reply. I got to the site on google and Im trying it out now. Looks like it's gonna take a while so I will get back to you later when my account password hopefully is recovered.

[@emmettjulius7888]

@Jaxxon Vivaan it did the trick and I finally got access to my account again. I am so happy! Thank you so much, you saved my account !

[@jaxxonvivaan5249]

@Emmett Julius glad I could help :)

[@stevo728822]

In the oil price example, the Low Price and High Price could be switched around since the aim is to make the biggest profit not the most sales.

[@GarrettPetersen]

If I were making this video today, I would have done it in terms of output, not price. Production occurs before the goods can be brought to the market and sold, so Bertrand competition makes little sense. Still, what I meant to capture in the video was (admittedly unrealistic) price competition, whereby a firm can slightly undercut another firm to capture the larger share of the market. The top left box represents the competitive equilibrium, the bottom right represents a collusive agreement to charge the monopoly price, and the other boxes represent one firm undercutting the other and capturing a large share of the market without being bid down all the way to the competitive price.

[@Beansent]

But hey, that's just a theory, a GAME THEORY! Thx for watching!

[@am7537]

TheMCBro HELLO INTERNET! WELCOME TO GAME THEORY!

[@LDacic]

What do you mean thanks for watching, it's not even your video...?

[@tache1715]

It's a joke because of a channels outro, type in youtube "The Game Theory"

[@SmallChangeDubstep]

it sounded like you said life instead of light so i failed my final exam, thanks

[@GarrettPetersen]

Oh dear, I hope you're kidding!

[@marioarvayo]

Why is there no explanation on the more complex equilibrium? Do you take the highest ratio? How is that determined when there are more options?

[@bitsbard]

If you're treasuring these insights, there's a book I hold dear that expands on them. "Game Theory and the Pursuit of Algorithmic Fairness" by Jack Frostwell

[@Silverstorm288]

Exept that in real life, oil companies are doing illegal price fixing. I guess that'd be the dominant strategy ?

[@briannajenkins5139]

I liked the video but I really wish there was a great explanation to the last game as those are the ones I see more frequently.

[@usfalg116]

How do you know its A and E ???

[@gokcenyuksel6662]

Your videos are excellent. Keep going. We are waiting more videos. Thanks.

[@jl6523]

Poorly constructed video. Not sure why you wouldn’t explain the answer at 3:39.

[@exclusivesounds5215]

He did, it’s the dominant strategy because it’s the highest pay off. I’m a little late but that’s ok 👌🏼 😂

[@commentator2718]

Great video! Thank you for making it short and clear!

[@amaarmarco530]

didnt understand a shit

[@AkizaVesper]

then watch it again.

[@darkrebel123]

This video describes the technical aspects of game theory, but if you want a much more in depth explanation of how game theory plays our in every day interactions etc, I would suggest looking up a stanford course here on youtube on behavioral biology by Robert Sapolsky, he does an absolutely wonderful job of describing game theory and how it relates to biology and social interactions between organisms, including humans. His explanation is so easy to follow along and he really shows the importance of it. Steven Pinker also does an amazing job of explaining it in his book "The Better Angels of Our Nature". I think that an understanding of game theory is absolutely revolutionary even in everyday life for understanding the motives of people and their actions, and both of these men do a good job of breaking it down and showing why it is so important.

[@gonebamboo4116]

Interesting to consider this applied to the Fed once you understand their true motivation

[@Spathephoros]

Should be B, F for the complicated one, no? Without context for what the numbers represent we should assume 0, 0 is best like it was in the other games.

[@smaco6633]

But this is just a theory, a game theory. Thanks for watching.

[@SuperCoupe300]

sooooo, do i cut the light grey, medium grey or dark grey wire?

[@rname1112]

This is an ok basic example and understanding of This theory, but this theory is actually flawed, human emotions are too random to calculate and to say this is or that is how people would act in certain situations. You cant say this is or that is a dominant strategy equilibrium because it depends on the game or situation you are in because the rules will never be set and unchangeable they will be forever changing because Dominant , winning or losing is all subjective, even if people try to force you inside the rules they have created the human mind can break those rules by simply not excepting it. Why Because the terms Dominant, winning or losing is Subjective and subject to Variable change as soon as a person rejects the rules or has a difference of opinion your rules of dominant strategy equilibrium, the Nash equilibrium, the subgame perfect Nash equilibrium, the Bayesian equilibrium, and the weak perfect Bayesian equilibrium are Null in void. Simply because your ideas and concepts of Game theory equilibrium is SUBJECTIVE. In the end NOBODY is right or wrong because its all how a person looks at the situation. Just because someone says you won or lost doesn't make it true even if the game says u lost, us as humans always have the power to reject it and according to universal law they would be right. So just like all other theories and philosophy it will just spin u in a circle, nobody wins nobody loses. This theory works if u set what you determine as Dominant or winning and calculate what it will take to accomplish that, But like all theories it runs straight into a wall. This is not just game theory this is human psychology conditioning theory, But when they say Game theory you Fall Into the trap of playing by there rules, this is human psychology conditioning theory. They call it game theory because people fall into there game they have created, this theory has nothing to really do with games its about being so far ahead of your opponent psychologically that they have no clue they are being played with like a puppet. This is human psychology conditioning theory.

[@GarrettPetersen]

Yes. In the years since I made this video I've started working in experimental economics, which has a more realistic grounding than game theory. Game theory is more of a mathematical curiosity than a useful description of how people behave.

[@rname1112]

+The Economics Detective Right, but it will work ONLY if you trap people inside of the rules or if they are willing to put themselves within the rules of the Nash theory. Like 1st to 10 playing basketball wins, if you stay within those set rules then you could mathematically calculate down to a science the Dominant strategy equilibrium. But then it could get deeper and deeper because of variable change like what's considered fair and unfair because you could hurt the person so they will not be able to play and score ten shots. This theory would work if you know what u want and are willing to do everything possible to get what u want, or it will Make for a great Poker game strategy lol. I'm over thinking this, I randomly stumbled across your video after somebody mentioned Nash Game equilibrium theory and it just got me thinking. It would work great if you were a selfish evil heartless person and are willing to do whatever it takes to get what u want. You could calculate how to take over the world and plan it out step by step and it would work if you had enough determination until God or Man says enough and breaks out the Matrix or the Cube by not Accepting your rules, lol I think the so called illuminati have been using this theory against humanity for some time. Pretty clever, but all we have to do is simply refuse there rules, so I guess that's why they try to keep us in fear. This is a very interesting concept that is just as relevant as Einstein's E=mc2 if not more because with this theory you could control people and be 10 steps ahead of them before they even have a chance to know what's going on, crazy. And as long as they don't realize they are playing inside your rules they will never be able to break the rules and the game you have created because they are bound to the rules and boundaries you have set. now I see this is the strategy the illuminati and elitist have been using against humanity. And they put it in all there movies like the Matrix, The cube, Gamer and oh damn equilibrium.

[@sladekayastha6455]

its simple. humans behave towards their best self interest

[@izzyexplains8620]

I completely disagree with this criticism and I think it comes from a lack of understanding of actual game theory (not a 4 minute introduction without any math). Game theory, like anything else in mathematics, is a tautology and cannot be wrong. The issue is when it is applied to real life and the axioms and assumptions are clearly violated but is still used to model the system. That is the fault of the practitioner, not the theory. Game theory models real life extremely well with oligopolies that have the money and research to behave “hyper rationally”. Additionally, the idea that people have emotions is, for the most part, factored into the utility function.

[@dhakshirajan3289]

why cant the dominant strategy for player one in the final slide be B? he seems to be better off in more situations using B than A ie. situation in which player 2 uses E, F, G

[@jeffferaro24]

The equilibrium point is the box where both player 1 and player 2, as a pair, would "profit" the most.

[@jordiortega4436]

Very cool! Thx. -Jordi

[@williamjoyner3768]

i believe this is wrong the way you explained it. I think you might have confused your numbers since you included zeros and negatives. the dominate strategy equilibrium should be for both players to keep quiet. For instance, if player one decides to keep quiet and is aware that player 2 will testify of course player one will keep quiet because he receive no jail time (-1). which dominates his strategy of testifying. Same goes for if player 1 knows that player 2 will keep quiet player one dominant strategy is still to keep quiet because he will receive 2 years rather than 3. thus we get players 1 strict dominance strategy is to keep quiet. Same can be said for player 2. For example, if player 2 knows that player one will testify than player 2 will want to keep quiet and go free (-1) is the pay out and if player 2 knows that player 1 will keep quiet player 2 will still keep quiet and receive a payout of only 2 years in jail. rather than 3 if player 2 testifies thus we have a dominant strat equil and that is for both players to keep quiet. which will get both players (2,2) however, it is rational for both players to testify and receive a payout of (0,0) so that is why they say we should never choose a dominant strategy

[@kopanomoss5752]

i dont get the complicated example,what is the objective?

[@spicytunaproductions5566]

But both the robber and the victim have dominant strategies... its in te victims interest to lose 10 than potentially loose 1million, his optimal expected outcome is -20 versus -1mil, so his dominant strategy is to give the money, with respect to the robber its in his interest not to kill to have an expected outcome of +10... this gives a dominant equilibrium strategy of (-10,10) so there are no two nash equilibriums... as when there is a dominant strategy equilibrium the nash equilibrium also becomes (-10,10)

[@willyastop]

excellent video, particularly the oil company game.

[@opaf725]

BUT HEY! That’s just a theory! A GAME THEORY!

[@theomc1488]

This reminds me of that Tv show golden ball, its called something like that

[@polaroidstyles9348]

yea its linked to this we learned it in class haha

[@agingerrail123]

That's why oil companies collude

[@decaf-nosebleed]

Well that's just a video, A KZbin VIDEO, thanks for watching

[@kroganoperator]

Jesse Eisenberg is that you?

[@robsyko7783]

I finally understand! Thanks!

[@antwan1357]

I believe even though this is possible the best possible video on dominant strategy equilibrium or nash equilibrium that a much better video could be made using actors to help portray the prisoner's dilemma to keep the viewer interested for example using mafia actors and old school police detectives like in a classic al Capone style movie.

[@theepicgamehub9448]

Your table for the first example doesn't make sense. If player 1 testifies and player 2 keeps quiet, why would player one get 3 and player 2 -1? It would make more sense if the one that testifies gets less than the one that keeps quiet therefore both would testify as their strategy only gets better regardless of the other one changing their's

[@GarrettPetersen]

TheEpicGameHub Higher payoff represents a lighter sentence. If you testify against the other prisoner, the police give you a better deal, so you get a higher payoff.

[@kahinglam9306]

prisoner game, you made it sequential, if for their best interest without talking to each other, the nash equilibrium woult be (2,2)

[@maritime5843]

thx man helped me a lot !!!!

[@tymoney2000]

this example would’ve been better if you explained that 3 means you get off free and -1 means a harsh sentence. took me more than the video length to figure that out

[@ohnree4110]

So according to the definition of a game, next time I bust out a singleplayer "game" and my parents say I shouldn't be "gaming", I can straight up tell them they're factually incorrect. Pretty sweet.

[@GarrettPetersen]

Henri Reyes Only if your parents are game theorists.

[@ohnree4110]

+The Economics Detective Fortunately they aren't, which allows me to educate them in the process. I'll point them to your video :)

[@nikolandjelon]

Very good explanation thank you so much it cleared me two things at once! (woman approach and business)

[@IK-bk1vy]

are you reaching this for HSC concept because I find the US one is different to the way they teach me in Aussie

[@GarrettPetersen]

jack kosasih Not sure what HSC is.

[@westernbrumby]

It's a test, currently being taken by year 12 students.

[@lihkan]

I dont get the oil company example...Why not both charge high price?

[@GarrettPetersen]

Because nobody will buy your oil if a competitor undercuts your price.

[@getkat]

+The Economics Detective Yep. Just what Uber did to Lyft recently in the US!

[@lihkan]

I see, thanks!

[@jrjr1638]

Great video thanks. Subbed

[@aryaman61]

Thank you

[@TundraKaffe1]

Perfectly done

[@nickm.777]

Thanks

[@boogabooga223]

Why does it look familiar to Split or steal

[@GarrettPetersen]

boogabooga That is a similar game.

[@MrBurns-fq2xf]

Why is E better than F for player 2?

[@MrBurns-fq2xf]

Nvm I see it

[@MaryJane4and20th]

i love that the solution for the prisoners is to abolish prisons

[@jianyuhua]

Isn't the first one nash theory?

[@glennwatson3313]

I don't understand why getting off scot free would not be 0. Obviously the numbers don't represent years in prison, but why don't they?

[@issaeliyo]

thanks ...

[@abdelrahmanhamdy2426]

I came here after looking up how to communicate with MatPat...

[@bancopopular1155]

and that's just a theory.... A GAME THEORY

[@darkrebel123]

it's more than that, it's ban observation on how to achieve the optimal outcome in any social interactions, and can be observed in action from single cell organisms, all the way up to global politics. it is the very foundation of practically every interaction between to organisms. Dismissing it as "just a theory" is as ignorant as dismissing evolution as "just a theory", both are misleading truisms.

[@theprestopost6778]

Not perfect, but a very helpful video.

[@qwertz12345654321]

"coming soon"

[@aboubacaramine8689]

:) No, thank YOU.

[@CoffeePoints]

+Aboubacar Amine found the edgy memelord -__-

[@annunakim525]

why cant they both testify?

[@GarrettPetersen]

James Lee They totally can. In fact, that's the dominant strategy equilibrium.

[@annunakim525]

yeah but i mean why would anyone ever stray from just testifing? as both benefit the most from doing so...

[@annunakim525]

what i am saying is people who DO stray from this are more selfish people or people who do not trust their counterpart or accomplice

[@jedaye47]

James Lee because some people ain’t snitches

[@vegasvilliancswk2257]

One person gets left hook to the face other person gets overhand right to the eye for trying to intervene, and the person kicking everybody's ass has the winning strategy

[@3p1cd3m0ns14y3r]

"Game theory is the study of human behaviour in strategic settings." It studies AI to...

[@wolfpack707]

who came here after watching the Prison Break episode?

[@mitzelx]

Rinaldo hahaaaha 😂 I know which episode you're talking about, but my answer is not me.

[@wolfpack707]

Melisa I haha😁

[@timothycarter5871]

I came here to understand the game the military, JSU, and I are playing.

[@med4292]

i came here, after watching "A beautiful mind"

[@ethanatlan3800]

I did hahah

[@Altricksss]

But but you can't break a pinky promise

[@Tigerbait1998]

you couldn't have used worse numbers if you tried.

[@leeamraa]

two dudes in a tight elevator and each one is holding a monstrous fart; could you please ANALyse this situation to see what is their dominant strategy?!

[@carterjohnson3894]

...thats...not true

[@modebayojohnson2852]

i never comment on youtube videos, but the fact that you haven't just used prison sentences as the numbers is painfully annoying

[@xfghkhjfsejid]

Basically snitches get stitches.

[@angelmanev2205]

What??? O_O

[@felixli4398]

纳什理论

[@nickvalcke]

people

[@icre8it]

u r awesome - What is God's game theory? He created Game Theory you are explaining :) just sayin'

[@FearsomNinja]

Only delusional people believe in god. There is a direct relation between IQ and being religious, 8% of the global population is atheist, but they make up 92% of the population that have over 130IQ. Your selfish beliefs are a hindrance to the progression of our species.

[@ankitrojasnath1448]

why does anyone even exist

[@iceydaywalker9198]

evolution. there's no actual meaning to it. life is meaningless and absurd, as well as rife with suffering. i'd advise you not to have children. study schopenhauer, antinatalism, etc. also, fuck capitalism. :)

[@pipyon81]

Game theory encourages snitching. Fuh game theory bro

[@FilipeZendron]

nerd

[@garrettpetersen6534]

Game theory for beginners! It'll be fun!