nash equilibrium reliable?
http://web.mit.edu/newsoffice/2009/game-theory.html
An assistant professor at the Computer Science and Artificial Intelligence department of MIT found a way to apply computational complexity to game theory. Game theory, as we have learned in our lecture, is a branch of mathematics that can be applied to all different situations to describe strategic reasoning. Professor Daskalakis won a prize in 2008 on his dissertation focusing on the fact that Nash Equilibrium can be so hard to calculate that it couldn’t be found. He showed that Nash equilibriums belong in a category of problems where they are hard to calculate but easy to verify. An example of this is factoring a large number because once you find the answer it is easy to check if it is right, but finding the answer can be much more difficult. An example of a Nash equilibrium for this would be 3 person poker, where the amount of sets if strategies for all of players and dealers cards and bets are taken into consideration. Basically his theory formalizes the belief some have that Nash equilibrium does not always have an answer to what the rational behavior or strategy of a situation should be. Daskalakis came to the conclusion that there are 3 ways to deal with the unreliability of Nash equilibriums: 1. Say thy there are games that are hard to produce Nash equilibriums, so only use it in easy games. 2. Find another way to characterize markets such as other types of equilibrium that aren’t hard to find. 3. When it is hard to calculate, it may not be as difficult to find an approximation that may do a sufficient job of describing the correct strategy.