Introducing Mixed-Strategy Equilibria: Payoffs vs. Probabilities

Music 4 Econ: (Geerling, Mateer, O’Roark, & Smith)
August 23, 2022
All I Want for Christmas is an A on My Econ Final: A Holiday-Themed Review Class (Mandzik)
August 23, 2022

Students are usually taught to compute mixed-strategy equilibria in 2 × 2 games by determining what mixed strategy each player must play in order for the other player to be indifferent between their own pure strategies, evaluated using expected-utility reasoning. An alternative method, complementing the standard one, draws on each player’s computations of certain disparities between the payoffs he or she may receive, and uses that information to compute the probabilities for the players’ mixed strategies.

Ben Eggleston