5 BSNS113 2019 S2 - Game Theory(1) (3).pptx - Game Theory Oligopoly ndustrial Organisation Imperfect Competition Game Theory and the Economics of

5 BSNS113 2019 S2 - Game Theory(1) (3).pptx - Game Theory...

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Game Theory and the Economics of Cooperation Game theory is the study of how people behave in strategic situations. Strategic decisions: each person, in deciding what actions to take, must consider how others might respond to that action. ndustrial Organisation Oligopoly Game Theory Imperfect Competition
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Examples: Firms competing for business Political candidates competing for votes Jury members deciding on a verdict Animals fighting over prey Bidders competing in auctions The evolution of siblings’ behaviour towards each other The role of threats and punishment in long- ndustrial Organisation Oligopoly Game Theory Imperfect Competition
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Normal Form Games i.e. modelling players’ strategies 1.the players; 2.the strategies each player can choose; and 3.the players’ preferences over strategy profiles. Players choose their strategy simultaneously. Normal form games can be represented in a matrix. ndustrial Organisation Imperfect Competition Oligopoly Game Theory
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Prisoners' Dilemma Confess Stay Silent Confess K : 8 years N : 8 years K : 20 years N : free Stay Silent K: free N : 20 years K : 1 year N : 1 year Kelly Ne d 1.Players : 2 captured prisoners (Ned and Kelly) 2.Strategies : Confess, Stay Silent 3.Preference over strategy profiles: less prison time is better ndustrial Organisation Prisoners Dilemma Imperfect Competition Oligopoly Game Theory
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Confess Stay Silent Confess K : 8 years N : 8 years K : 20 years N : free Stay Silent K: free N : 20 years K : 1 year N : 1 year Kelly Ned ndustrial Organisation Prisoners Dilemma Imperfect Competition Oligopoly Game Theory
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