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Game theory question help

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    • Thread Starter

    I'm a bit confused with nash equilibrium, as I know it is when each player chooses their best strategy.

    Can someone explain to me what the answer to this question is and why?

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    B) (Cut,Cut), (Hold, Hold)

    Best way to work this out is to think given the other player plays an action, what is the best action?

    So, for example, given West plays Cut, what is East's best action? East is best off also playing Cut as 5 is the largest is [5, 0, 0]. [To make things easy, underline the 5 in Cut action for East]. Then, given West plays Hold, what is East's best action? East is best off also playing Hold as 30 is the largest of [10, 30, 0]. [Again, to make things easy, underline the 30 in Hold action for East]. Finally, given West plays Raise, what is East's best action? East is best off playing Hold as 60 is the largest of [10, 60, 55]. [Again, to make things easy, underline the 60 in Hold action for East].

    Now we have 3 underlined numbers for East. Do the same logic as above but hold East's actions constant and consider what West's best action is for each. Again, underline the numbers. Nash Equilibrium will be where both numbers are underlined. In this case, [5, 5] and [30, 30] corresponding for (Cut, Cut) and (Hold, Hold).
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