See that the strategy $\{(1,0), (0,1)\}$ is a Nash equilibrium in this simple game

game theory

Consider the payoff matrix,
$$\begin{bmatrix} (0,0) & (-1,1)\\
(1,-1) & (-10,-10)
\end{bmatrix}$$

Assume players want to maximize payoff.

If the row player choses strategy $(1,0)$ i.e., strategy 1. Then the column player must choose strategy $(0,1)$ to maximize his payoff ($0$ vs $1$)

But then the row player wants to change to strategy $2$ to change his payoff from $-1$ to $1$. At this point, the column player can only change to strategy $1$ to avoid a payoff of $-10$.

This means the pure Nash of this game is $\{(0,1), (1,0)\}$ and the solution $\{(1,0), (0,1)\}$ will be forever unstable (one player will always want to change).

Why is that $\{(1,0), (0,1)\}$ is a solution when computed? https://intranet.csc.liv.ac.uk/cgi-bin/cgiwrap/rahul/input.py


Is the algorithm for computing pure NE:

  1. First consider case when row player move first?
  2. Next consider case when column player move first?

I think this 2 is what I am missing

Best Answer

If the row player chooses strategy 1, the column player can choose between payoff 0 or 1, and will therefore go with 1 (i.e. strategy 2). If the column player chooses strategy 2, the row player can choose between payoff -1 and -10, and will therefore choose -1 (i.e. strategy 1)

So row 1, column 2 is a Nash equilibrium. As is row 2, column 1 for analogous reasons.

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