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You are here: Home / Game Theory / Econ 223 2014 / SImpler 2 player games: Kreps style Trust and Threat games

March 11, 2014 by jagfnz Leave a Comment

SImpler 2 player games: Kreps style Trust and Threat games

A component of our module on sequential games. The game tree for these two games is a little simpler than for the 2×2 entry deterrence games. Yet each game captures a fundamental strategic problem . When should we, and when should we not,  trust people? How can aggressive behaviour be sustained when one party clearly doesn’t want it to?

The first we is a situation of  strategic loss of trust (in the face of predictable opportunism)  – and one might wonder whether a promise would fix the problem of mistrust. The second is how non-cooperative, strategic avoidance of mutual arm can sustain one sided aggression/violence – and one might wonder whether a threat would fix the problem.

Note the adjective “strategic” applied to these games of (mis)trust and aggression . As per  the definitions  of game theory,  conscious, intelligent  rational thinking and reasoning about rational lines of play, and an awareness of each other’s rationality sustains the mistrust, the aggression.

  • (1) and
  • (2).

Filed Under: Econ 223 2014, Game Theory Tagged With: game theory, Game Theory 2014, Game Theory 2014 module 2, Module 2, sequential games intro

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