PPTChapter10

PPTChapter10 - Managerial Economics Professor Cliff Hawley...

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Prof. Clifford B. Hawley Managerial Economics Professor Cliff Hawley BADM 631 Introduction to Game Theory (Chapter 10)
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Prof. Clifford B. Hawley Game Theory Competing against few rivals: Effective decisionmaking dictates effective tactics. Effective tactics requires methods for anticipating rival’s responses, initiatives and counterresponses. Ex. Entry deterence; R&D decisions, adv. Pricing etc
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Prof. Clifford B. Hawley Strategy #1 Strategy #2 A11, B11 Game Theory -- normal form structure firm B Strategy #1 Strategy #2 firm A A12, B12 A21, B21 A22, B22
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Prof. Clifford B. Hawley Normal form: summarizes payoffs like those in Example #1 below Strategy #1 Strategy #2 $300, $160 Strategy #1 firm B Strategy #2 firm A $ 275 ,$ 190 $500, $180 $375, $240
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Prof. Clifford B. Hawley firm A If B plays 1 If B plays 2 A plays 1 Payoff:300 A plays 2 500 A plays 1 275 A plays 2 375 Example 1: A game from A’s perspective: Firms A & B each have 2 possible strategies
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Hawley
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This note was uploaded on 10/16/2010 for the course B&E BADM 631 taught by Professor Hawley during the Spring '10 term at WVU.

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PPTChapter10 - Managerial Economics Professor Cliff Hawley...

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