3b_Simultaneous

3b_Simultaneous - Nile W. Hatch 2002 2008 ManEc 387...

Info iconThis preview shows pages 1–12. 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

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

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: Nile W. Hatch 2002 2008 ManEc 387 Economics of Strategy Game Theory Competitive Dynamics of Strategy in Simultaneous Games 1 Nile Hatch 1996 2008 Exploring Industry Structure Bargaining Power of Suppliers Rivalry between Competitors 2 Customer Power & Preferences Threat of Substitutes Threat of Potential Entrants 2 Nile Hatch 1996 2008 Game Theory Game theory seeks to explain how non- cooperating players (frms, individuals) interact Its goal is to predict the outcome oF interaction between players Nash equilibrium The outcome reached when each player is playing a best response to all other players An outcome where no player has an incentive to deviate 3 Nile Hatch 1996 2008 A Beautiful Mind The coolest math PhD students gather to seek dancing entertainment with local young ladies In the movie, John Nash proposes that they should all dance with brunettes and avoid the rejection they would face if they all asked the blonde to dance Is this a Nash equilibrium? 4 Nile Hatch 1996 2008 Fundamentals of Game Theory 1. Identify the players 2. Identify their possible actions 3. Identify their conditional payoffs from their actions 4. Determine the players strategies My strategy is my set of best responses to all possible rival actions 5. Determine the equilibrium outcome(s) equilibrium exists when all players are playing their best response to all other players 5 Nile Hatch 1996 2008 Try your hand High-Low game Heads-Tails game 6 6 Nile Hatch 1996 2008 Prisoners Dilemma Games of Dominant Strategies Two thieves are caught after their getaway (they hide the loot) They are being held in separate interrogation rooms Evidence against them is not strong so the DA needs one to testify against the other or they go free and get the loot If one rats against his partner, he gets leniency; if one is ratted against by his partner, the evidence convicts him Should they rat or not rat? 7 Nile Hatch 1996 2008 The Prisoners Dilemma Games of Dominant Strategies-1-2-1 2 2 1-2 1 Prisoner B Rat Not Rat Rat Not Rat Prisoner A * 8 Nile Hatch 1996 2008 Dilberts Dilemma 9 Nile Hatch 1996 2008 Another Prisoners Dilemma 10 10 Nile Hatch 1996 2008 Group Exercise Meier & Frank and Mervyns, two department stores at a local mall, are both planning to launch after-Christmas sales on their entire lines of womens and girls clothing Since its the end of the year and advertising budgets are nearly exhausted, neither store can afford to promote both lines. Each store must choose to promote either one line or the other....
View Full Document

This note was uploaded on 04/22/2011 for the course MANEC 387 taught by Professor Crawford,l during the Fall '08 term at BYU.

Page1 / 39

3b_Simultaneous - Nile W. Hatch 2002 2008 ManEc 387...

This preview shows document pages 1 - 12. Sign up to view the full document.

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