lecture24full

lecture24full - Types of games 1 Static games of complete...

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Unformatted text preview: Types of games 1 Static games of complete information (Nash equilibrium) 2 Dynamic games of complete information (Subgame perfect equilibrium) 3 Static games of incomplete information (Bayesian Nash equilibrium) 4 Dynamic games of incomplete information (Perfect Bayesian equilibrium) Nash Equilibrium Nash Equilibrium: each player’s strategy is a best response to the strategies of the other players Subgame Perfect Nash Equilibrium An equilibrium is subgame perfect if a Nash equilibrium is played in every subgame Duopolies 1 Compete on prices (Bertrand) Firms simultaneously choose price, lowest price captures all the demand Low cost producer chooses price just below high cost producer’s marginal cost Sequential Bertrand: lots of SPNE when high cost producer chooses first 2 Compete on quantities Firms simultaneously choose quantities (Cornout), choice of both quantities affect the price Derived choice of x 1 as a function of the choice of x 2 (best response function) Nash Equilibrium was found at the intersection of best...
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This note was uploaded on 05/13/2010 for the course ECON 105D taught by Professor Cur during the Fall '09 term at Duke.

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lecture24full - Types of games 1 Static games of complete...

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