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18 download_doc.php - G202 (3/2/2009) Imperfect Price...

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G202 (3/2/2009) Imperfect Price Discrimination Imperfect Price Discrimination: Groups of consumers are charged different prices. The firm’s profits are increased. Consumer surplus is decreased, but consumer surplus is not equal to zero. Basics of Game Theory Players: These are the decision makers within the game. Usually within firms, government, or interest groups. Strategies: These are the decision choices. Price, Products, Advertising, Campaigning, Regulation, etc… Payoffs: These are the outcomes of the decision choices. Usually in terms of profits or losses. Basics of Game Theory Dominant Strategy: A strategy that results in the highest payoff for a player regardless of what strategy their rival plays. Secure Strategy:
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In absence of a dominant strategy, play the strategy that guarantees the highest payoff given the worst payoff. Think like your Rivals:
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18 download_doc.php - G202 (3/2/2009) Imperfect Price...

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