Chapter 4

Larger Games and ­Refinements to Nash ­Equilibrium

In this chapter, we will expand our horizons by looking at some games with more than two choices for each player so that we can get a feel for how the ideas we have been discussing generalize. We will also look at some “refinements” to the Nash equilibrium and dominant strategy concepts that help them make more sense and more relevant in the real world.

4.1 Iterated Dominance and Dominated Strategies

Let’s have a look at the game in Table 4.1.

Table 4.1. Red Blue Battle

Red Army

Blue Army

March North

March South

March North

15,6

11,8

March South

6,12

10,9

Using the same methods as before, our solution algorithm will look like Table 4.2 ...

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