Risk dominance refers to a situation in game theory where one strategy is more likely to be selected because it minimizes potential losses compared to other strategies, even if it isn't the strategy with the highest payoff. It plays a crucial role in determining equilibrium selection in games with multiple Nash equilibria, guiding players towards strategies that are safer against potential deviations by others.

Risk Dominance

Risk dominance

Game theory is a mathematical framework used for analyzing strategic interactions where the outcome for each participant depends on the actions of all involved. It provides insights into competitive and cooperative behaviors in economics, politics, and beyond, helping to predict and explain decision-making processes in complex scenarios.

game theory

potential losses

highest payoff

Equilibrium selection refers to the process of determining which equilibrium will be reached in a game with multiple equilibria, often guided by criteria such as risk dominance, payoff dominance, or evolutionary stability. This concept is crucial in game theory as it helps predict outcomes in strategic interactions where players have multiple rational responses.

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