Seminar 208, Microeconomic Theory: A Rudimentary Index of Strategic Stability: Deterring Defectors, Sustaining Loyalists and Forming Equilibrium

Seminar | January 28 | 4-5:30 p.m. | 639 Evans Hall

 Ehud Kalai

 Department of Economics

A rudimentary index explains Nash-equilibrium choices observed in behavioral economics.

The index assigns stability levels = 0; 1; :::; n, to strategy profiles of n-person games: Level 0 is assigned to profiles that are not Nash equilibrium, levels are assigned to Nash equilibria in increasing levels of stability, and level n is assigned to dominant-strategy equilibria.

The index measures players’ confidence in the optimality of their choices; and expands Nash’s question of ‘whether a strategy profile deters individual defectors` to ‘what size defector groups does a strategy profile deter