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In game theory and economics, a mechanism is called incentive-compatible (IC) [1]: 415 if every participant can achieve their own best outcome by reporting their true preferences. [ 1 ] : 225 [ 2 ] For example, there is incentive compatibility if high-risk clients are better off in identifying themselves as high-risk to insurance firms , who ...
A straightforward example of maximizing payoff is that of monetary gain, but for the purpose of a game theory analysis, this payoff can take any desired outcome—cash reward, minimization of exertion or discomfort, or promoting justice can all be modeled as amassing an overall “utility” for the player.
[1] Determinacy A subfield of set theory that examines the conditions under which one or the other player of a game has a winning strategy, and the consequences of the existence of such strategies. Games studied in set theory are Gale–Stewart games – two-player games of perfect information in which the players make an infinite sequence of ...
Mean field game theory is the study of strategic decision making in very large populations of small interacting agents. This class of problems was considered in the economics literature by Boyan Jovanovic and Robert W. Rosenthal, in the engineering literature by Peter E. Caines, and by mathematicians Pierre-Louis Lions and Jean-Michel Lasry.
Solving mean payoff games can be shown to be polynomial-time equivalent to many core problems concerning tropical linear programming. [8] Another closely related game to the mean payoff game is the energy game, in which the Maximizer tries to maximize the smallest cumulative sum within the play instead of the long-term average.
In game theory, a Bayesian game is a strategic decision-making model which assumes players have incomplete information. Players may hold private information relevant to the game, meaning that the payoffs are not common knowledge. [1] Bayesian games model the outcome of player interactions using aspects of Bayesian probability.
In economics and game theory, complete information is an economic situation or game in which knowledge about other market participants or players is available to all participants. The utility functions (including risk aversion), payoffs, strategies and "types" of players are thus common knowledge .
An important problem in the theory of cooperative dynamic games is the time-consistency of a given imputation function (in Russian literature it is termed dynamic stability of optimality principle). Let say that a number of players has made a cooperative agreement at the start of the game.