Thursday, Sep 21st

Risk Dominance vs Payoff Dominance

This idea is nothing new if you’re familiar with my work. If not, let me quickly reference an excerpt from the DFS Game Theory Bible course released last season.

Larry Samuelson released a study in 2016 titled Game Theory in Economics and Beyond, wherein he writes, “Perhaps the culmination of the refinements (in equilibria) program was Harsanyi and Selten’s (1988) theory of equilibrium selection, which indeed delivered unique outcomes, but is now most often cited for having introduced the distinction between risk dominance and payoff dominance.” This solution refinement concept of Nash Equilibrium (NE), combined with human psychology . . .

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