Flashcards on Game Theory- Microeconomics
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Prisoner's dilemma
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-game where both players have dominant strategy - both players are worse off when they play their dominant strategy then they would be in other scenerio's - noncooperation
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sequential move
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where one firm acts first and the other firms respond
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sequential games are solved __________
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backwards
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the five competitive forces model
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- competition from existing firms -the threat for new entrants -competition from substitute goods or services -bargaining power of suppliers - bargening powers of buyers
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oligopoly
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industry with only a few firms
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conditions that cause oligopoly
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- ownership of key input - government imposed barriers -economics of scale
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what features does game theory have?
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-players - rules -strategies -payoffs
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nash equilibrium
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a situation where each firm chooses the best strategy
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dominant strategy
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strategy that is best for the firms
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3 examples of ogilopolies
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computers, athletic footware, and cigerettes
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a game theory analysis of deterring entry concludes that...
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deterring entry may be a good or bad idea
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how is game theory used in econ?
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the rules of the game include matters beyond a firm's control, a strategy is a firms actions to achieve a goal, and the payoffs are profits
