What is Dominance Theory?

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Game Theory > Forum > What is Dominance Theory?

What is Dominance Theory?
Mutua Fred, Student (University), Kenya, Member
Can anybody explain to me the concepts of dominance theory vs. the prisoners dilemma?
 

 
Dominance Theory Types and Prisoner's Dilemma
Jaap de Jonge, Management Consultant, Netherlands
In simple terms, dominance theory in game theory holds that:
  • If a particular strategy is always worse than another for a player, we say that the first strategy is strictly dominated.
  • Rational players will never play strictly dominated strategies.
  • If one strategy is always better than the rest, then the only sensible outcome is for both players to play those strategies.
Dominant strategies are considered as better than other strategies, no matter what other players might do. In game theory, there are two kinds of strategic dominance:
  1. A STRICTLY DOMINANT STRATEGY is the strategy that always provides greater utility to a the player, no matter what the other player’s strategy is;
  2. A WEAKLY DOMINANT STRATEGY is the strategy that provides at least the same utility for all the other player’s strategies, and strictly greater for some strategy.
Prisoner's dilemma: A dominant strategy equilibrium is reached when each player chooses his/her own dominant strategy. In the prisoner’s dilemma, the dominant strategy for both players is to confess, which means that confess-confess is the dominant strategy equilibrium, even if this equilibrium is not a Pareto optimal equilibrium.
 

   

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