kf010-illustration1

kf010-illustration1 - 1 Ka-fu Wong University of Hong Kong...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Ka-fu Wong University of Hong Kong Nash Equilibrium 2 Example Should Cathay Pacific spend more on advertising? Suppose that United Airlines and Cathay are the only carriers that serve the Chicago-Hong Kong market. 3 Example Should Cathay Pacific spend more on advertising? If the relevant payoffs are as shown, does Cathay have a dominant strategy? Does Cathay have a dominant strategy? No! Raise ad spending Leave spending the same Raise ad spending $3000 for U $5000 for C $8000 for U $3000 for C Leave spending the same $4000 for U $4000 for C $5000 for U $6000 for C Cathay Pacific United Dominant Strategy : One that yields a higher payoff no matter what the other players in a game choose. 4 Example Should Cathay Pacific spend more on advertising? If the relevant payoffs are as shown, does United have a dominant strategy? Does United have a dominant strategy? No!...
View Full Document

This note was uploaded on 11/07/2010 for the course ECONOMICS ECON1001 taught by Professor Prof during the Spring '10 term at HKU.

Page1 / 12

kf010-illustration1 - 1 Ka-fu Wong University of Hong Kong...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online