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Sunday, April 08, 2018

Level K thinking in Auctions and Assistants

How we also model interaction in any kind of interaction.   Adversarial or Collaborative

Level-K Thinking in Auctions  (Page 11)  By David Banks, Duke University ...

From Talk notes.

" ... A fourth solution concept is level-k thinking. If Daphne is a level-0 thinker, she bids non-strategically. If she is a level-1 thinker, she believes Apollo is a level-0 thinker, and makes her best response given her subjective assessment of the probabilities. If she is a level-2 thinker, she believes Apollo is a level-1 thinker, and so forth.

The “I think that you think that I think ...” reasoning becomes intricate. (Recall Vizzini’s analysis of the iocaine powder in The Princess Bride). An example will be more clear: Suppose Daphne is a level-2 thinker. She believes Apollo is a level-1 thinker who thus believes that she is non-strategic....   "

From talk described here.

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