Question

Suppose that two people are playing a game and they have to decide where to meet...

Suppose that two people are playing a game and they have to decide where to meet for dinner.

They only get positive payoffs if they go to the same venue. If we allow them to talk before going

to dinner what impact does that have on the outcome theoretically? What about in practice?

Suppose that a similar situation happens except it is a person you want to avoid so you only earn

a positive payoff if you and they are in different locations. Conversely, they only earn a positive

impact if they are where you are. What impact does communicating about your choices have in

theory and practice?

(Game Theory)

Business   Economics   
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Answer #1

If we allow thwm to talk then they would obviously choose to go to the same vanue since that fetches then positive payoffs . Even if it is a simultaneous move game , both will try to maximize payoffs . Hence both will choose same venue .

In the second case communication can help me decide a separate venue but it also runs a risk that communication might help the other person to know about my venue . This can have neagtive impact on me . But if there is no communication the nash equilibrium ends up me selecting a separate location .

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