ch10.me - GAME THEORY & COMPETITIVE STRATEGY Chapter 10...

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GAME THEORY & COMPETITIVE STRATEGY Sizing up competitive situations according to: 1. Number of Competitors 2. The Degree of Conflict or Cooperation 3. The Opportunity for Communication Chapter 10 slide 1 4. Single or Repeated Competition 5. The Amount of Information Available
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ANALYZING PAYOFF TABLES First, Translate Competitive Situation into a Payoff Table . Second, Analyze Table . 1. Identify Each Side’s Best Responses. 2. Eliminate Dominated Strategies (if any). Does either side have a dominant strategy? 3. In the Absence of Dominant Strategies, is there a Pair of Equilibrium Strategies? 10.2
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, 2 , 1 , -4 , -3 , -2 , -5 , 7 , 3 , 5 C1 C2 C3 R1 -2 -1 R2 3 5 R3 -3 -5 10.3 ZERO-SUM GAMES Market-Share Example How does one find Equilibrium Strategies? Equilibrium: R2 versus C2 (where circle and square coincide). Resulting Value is (2, -2). 7 2 4 2 -2 5
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ZERO-SUM GAMES: SUMMARY - There is pure conflict: one side’s gain is the other’s loss. - There is no possibility of cooperation.
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ch10.me - GAME THEORY & COMPETITIVE STRATEGY Chapter 10...

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