Information geometry and game theory

Abstract

When the strict rationality underlying the Nash equilibria in game theory is relaxed, one arrives at the quantal response equilibria introduced by McKelvey and Palfrey. Here, the players are assigned parameters measuring their degree of rationality, and the resulting equilibria are Gibbs type distribution. This brings us into the realm of the exponential families studied in information geometry, with an additional structure arising from the relations between the players. Tuning these rationality parameters leads to a simple geometric proof of the Nash existence theorem that only employs intersection properties of submanifolds of Euclidean spaces and dispenses with the Brouwer fixed point theorem on which the classical proofs depend. Also, in this geometric framework, we can develop very efficient computational tools for studying examples. The method can also be applied when additional parameters are involved, like the capacity of an information channel.