ECON1000 S2 2021 – GTP Brief

ECON1000 S2 2021 – GTP Brief 

1. Context and Overview 

The Game Theory Presentation (GTP) is worth 30% of the final mark. 

The GTP is a ‘take-home’ exercise with a set of tasks to do. The GTP is based on Lecture Topics: L1 and  L2. You will have twenty (21) days to complete the GTP on your own. 

▪ Assessment brief available on Blackboard (Bb): 13th August 2021, 11:59pm. ▪ Clarifications of and indirect guidance on GTP in L2(a) and L2(b) tutorials: Week 4 of August  16th to 20th; Week 5 of August 23rd to 27th. 

▪ Due date/time of GTP: Word Document to Turnitin by Week 6 Friday 3rd of September, 11:59pm (Perth, AWST). 

GTP consists of  two parts:  

Part 1 is on the  first issue,  

worth 20  

marks 

Part 2 is on the  second issue,  worth 10  

marks 

This game theory presentation (GTP) in S2 2021 relates to two separate issues.  Your objective is to apply game theory to these issues: 

The first issue is about your hypothetical driving behaviour towards an artificial intelligence (AI) robotic agent vs. one of your fellow humans on the road. How would you respond in say a merging-traffic situation, would you treat an AI self driving car any different to a human driver? Would you take advantage of and exploit a friendly/benevolent AI agent and not feel guilty about it? Similarly, would you be inclined to take advantage of a friendly/non-aggressive human driver or act kind to them? What would you do? 

The second issue is about climate change. In this unit, you will become familiar with the collective action problem of climate change seen as a coordination game between two major economic powerhouses, China and the US. An idea here is that the environment is a public good that calls for collective action and cooperation amongst its citizens—yet when a nation acts self-interestedly there is an incentive to ‘free ride’ on the climate change mitigation efforts of others. How is the climate change game being played out in recent times? Is it a global free-rider problem?

A general guide on what the marker is looking for in the GTP is recalling the tutor-student discussions  in the workshop sessions: WAQ_2 of Module L1; WAQ_2 of Module L2(a); and WAQ_2 of Module L2(b).  Your tutor as an exemplar would have gone through the process on how best to explain the payoff  matrices, and so on. 

To do the GTP, complete the tasks set out in this assessment by yourself, and then submit it to Turnitin  by the due date: include your Full Name and Student ID as a title in the Word document when  submitting your work (see Assessments tab on Bb). 

Note, the word count is a suggested maximum. The main thing is that you just answer the question  and have sufficient explanations. For more information, see PDF on Bb, “Marking Guidance and FAQs  for GTP S2 2021”. 

1. Assessment Tasks 

Part 1 – 20 Marks 

Read the following news article: 

https://www.sciencedaily.com/releases/2021/06/210610135534.htm 

This article is based on the following peer-reviewed paper by Karpus, Jurgis, Adrian Krüger, Julia  Tovar Verba, Bahador Bahrami, Ophelia Deroy (2021), “This Algorithm exploitation: Humans are  keen to exploit benevolent AI”, iScience, Vol. 24 (6) June 25, https://doi.org/10.1016/j.isci.2021.102679. The expectation is that you should only need to focus your attention on reading the introduction  

and discussion sections of Karpus’ et al. (2021) paper. 

Your game theory tasks for Part 1 are as follows: 

In 2 separately played games, you are to construct a relevant payoff matrix (in numbers only) for  each game based on the main conclusions from the paper. 

In the first game, to help you construct the payoff matrix, here are the key parameters: ▪ There are two players – player ‘a’ you, and player ‘b’ AI robotic agent. 

▪ There are two strategies – cooperate or defect. 

▪ Each strategy has an associated payoff. 

Think of this as a simultaneously played game: this is a game played once and is repeated more  than once, yet the rules, players, and payoffs are the same each time. 

In the second game, to help you construct the payoff matrix, here are the key parameters: ▪ There are two players – player ‘a’ you, and player ‘b’ another human. 

▪ There are two strategies – cooperate or defect. 

▪ Each strategy has an associated payoff. 

Think of this as a sequentially played game: one player (chosen randomly) chooses a strategy  first, and then the second moves. Assume players are acting rationally. 

In each game, you will need to work out what the associated numerical (hypothetical) payoffs are.  Explain in words each quadrant and any specific outcome you come across. 

In your analysis, discuss the role of preferences amongst the players and how this affects the  allocation. Provide some comments on the differences on fairness between the two separate  games. 

Part 2 – 10 Marks 

You would be somewhat familiar with the game theory of the climate change problem in WAQ_2 in  Module L1. Read the following article: 

https://www.theatlantic.com/science/archive/2021/04/an-outdated-idea-is-still-shaping-climate-policy/618652/ The author of The Atlantic article Robinson Meyer is led to believe that both China and the US are  now getting serious about cutting emissions, and in 2021 seem to be supportive of a sustained decarbonisation over the coming decades. Is this an accurate observation? Do some extra online  research to see if there is a real sense of optimism and concerted effort to cut emissions and green  the economy [choose either the US or China to investigate]. 

Your game theory task for Part 2 is as follows: 

Note for Part 2, you do not need to construct a relevant payoff matrix for this particular US-China  climate change game. In this game, here are the key parameters and assumptions: ▪ There are two players – player ‘a’ US, and player ‘b’ China. 

▪ There are two strategies – decarbonise (DC) or nearly business-as-usual (NBAU). ▪ Both players hold unconditional preferences because there is unilateral action. That is, each  player acts independent of what the other player is doing. 

▪ That the decision-making process to decarbonise is driven by internal (domestic) conflicts. 

What do think is the likely state of play over the next decade or so for each nation with respect to  their climate change policy position? Use the following game theory concepts of ‘best response’ and  ‘dominant strategy’ when explaining your answer.