Perfect Prediction Equilibrium

Perfect Prediction Equilibrium

This talk was held at the 2nd International Conference on Economic Philosophy, Strasbourg, on Friday, October 10th, 2014.

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Ghislain Fourny

October 10, 2014
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  1. Perfect Prediction Equilibrium Ghislain Fourny Stéphane Reiche Jean-Pierre Dupuy 2nd

     interna*onal  conference  on  Economic  Philosophy   Strasbourg, France October 10, 2014
  2. LEIBNIZ, NASH AND STACKELBERG

  3. Leibniz

  4.                Peter    

    Mary   Leibniz and Game Theory
  5.                Peter    

    Mary   Leibniz and Game Theory
  6.                Peter    

    Mary   Nash/Normal Form Fixed!  
  7.                Peter    

    Mary   Nash/Normal Form Fixed!  
  8.                Peter    

    Mary   Nash/Normal Form Fixed!  
  9.                Peter    

    Mary   Nash/Normal Form Fixed!  
  10.                Peter    

    Mary   Nash/Normal Form
  11. Nash/Extensive Form Fixed!   -­‐  or  -­‐   -­‐  or

     -­‐   Past   Present  
  12. Nash/Extensive Form -­‐  or  -­‐   -­‐  or  -­‐  

    Present   Future  
  13. Nash/Extensive Form Fixed!   -­‐  or  -­‐   -­‐  or

     -­‐   Past   Present  
  14. What about... this? -­‐  or  -­‐   -­‐  or  -­‐

      Past   Present  
  15. Causal vs. Counterfactual Misconception: Causal dependency ≠ Counterfactual dependency

  16. Non-causal dependencies 1. Quantum entanglements 2. Common cause 3. General

    random variables
  17. SO, WHAT DO WE DO DIFFERENTLY?

  18. Assumptions 1. Extensive Form 2. Strict Preferences 3. Perfect Information

    4. No Chance Moves 5. CK of Rationality
  19. Assumptions 1. Extensive Form 2. Strict Preferences 3. Perfect Information

    4. No Chance Moves 5. CK of Rationality 6. CK of outcome, of all decisions, of thought processes 6. Fixity of the past or Nash/Subgame Perfect Equilibrium Perfect Prediction Equilibrium
  20. Perfect Prediction

  21. APPETIZER: PROMISE GAME

  22. Promise Game 0 0 -1 2 1 1

  23. Promise Game 0 0 -1 2 1 1

  24. Promise Game 0 0 -1 2 1 1

  25. Promise Game 0 0 -1 2 1 1

  26. Promise Game 0 0 -1 2 1 1

  27. Promise Game 0 0 -1 2 1 1

  28. Promise Game: SPE 0 0 -1 2 1 1

  29. Promise Game 0 0 -1 2 1 1

  30. Promise Game 0 0 -1 2 1 1

  31. Promise Game: PPE 0 0 -1 2 1 1

  32. Thought Experiment ?   0 0 -1 2 1 1

  33. GENERAL PRINCIPLES

  34. 1st principle: preemption 1   2nd  principle:  ra*onal  bridge  

    2   ☹   ☺   ✗   ☺   ✓  
  35. Self-fulfilling prophecy Outcome   An*cipa*on   Causal   Dependency  

    Counterfactual   Dependency  
  36. ANOTHER EXAMPLE: TAKE- OR-LEAVE GAME

  37. TOL Game 1 0 0 2 5 3 3 1

    2 4
  38. TOL Game 1 0 0 2 5 3 3 1

    2 4
  39. TOL Game 1 0 0 2 5 3 3 1

    2 4
  40. TOL Game 1 0 0 2 5 3 3 1

    2 4
  41. TOL Game 1 0 0 2 5 3 3 1

    2 4
  42. TOL Game 1 0 0 2 5 3 3 1

    2 4
  43. TOL Game 1 0 0 2 5 3 3 1

    2 4 1  
  44. TOL Game 1 0 0 2 5 3 3 1

    2 4 2  
  45. TOL Game 1 0 0 2 5 3 3 1

    2 4 2  
  46. TOL Game 1 0 0 2 5 3 3 1

    2 4 1  
  47. TOL Game 1 0 0 2 5 3 3 1

    2 4 2  
  48. TOL Game 1 0 0 2 5 3 3 1

    2 4 2  
  49. CONCLUSIVE REMARKS

  50. Take-Home Message      Nash      Fixity  of  the

     past          PPE            CK  of  the              outcome  of  the  game  
  51. Theorems Theorem 1 The Perfect Prediction Equilibrium exists and is

    unique. Theorem 2 The Perfect Prediction Equilibrium is Pareto-Optimal.
  52. Forward Induction SPE Backward Induction PPE Forward Induction

  53. Kantian Honesty Never  act  in  such  a  way  that,  

    Had  your  ac*on  been  an8cipated,   It  would  not  be  possible   For  you  to  carry  it  out.  
  54. Business Value Descriptive in an ideal setting Normative in a

    real-life setting
  55. Picture  Copyright:    sereznyi,  shtanzman,  denispc  /  123RF  Stock  Photo