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Unformatted text preview: ECON 201 1 / 45 Game Theory and Oligopoly A ECON 201 Chaps 13 & 14 Chaps 13 & 14 Preliminaries Example 1, p494 Example 2, p45461 Example 3, p4767 Example 4, p47882 Conclusions ECON 201 2 / 45 We will cover: 1. static games and pure strategies; pp 452463, 494497 2. sequential games; pp 464472, 505512 But we won’t cover ■ cartels; pp446452 ■ monopolistic competition; pp483486 ■ mixed strategies; pp 498500 ■ repeated games; p5134 ■ auctions; pp514518 Preliminaries Chaps 13 & 14 Preliminaries Static games in pure strategies Static games Best responses Representation Normal form for a Prisoners’ dilemma The normal form A 1 ’s BR for the PD Nash equilibrium NE in the PD Example 1, p494 Example 2, p45461 Example 3, p4767 Example 4, p47882 Conclusions ECON 201 3 / 45 Static games in pure strategies Chaps 13 & 14 Preliminaries Static games in pure strategies Static games Best responses Representation Normal form for a Prisoners’ dilemma The normal form A 1 ’s BR for the PD Nash equilibrium NE in the PD Example 1, p494 Example 2, p45461 Example 3, p4767 Example 4, p47882 Conclusions ECON 201 4 / 45 Plan: ■ Defining and representing best responses ■ Four duopoly examples: 1. Cournot in discrete strategies 2. Cournot in continuous strategies 3. Bertrand with homogeneous goods 4. Bertrand with differentiated goods Static games Chaps 13 & 14 Preliminaries Static games in pure strategies Static games Best responses Representation Normal form for a Prisoners’ dilemma The normal form A 1 ’s BR for the PD Nash equilibrium NE in the PD Example 1, p494 Example 2, p45461 Example 3, p4767 Example 4, p47882 Conclusions ECON 201 5 / 45 A static game is played once by players who act simul taneously, and hence do not know how other players will act at the time they must make a decision (p492). Best responses Chaps 13 & 14 Preliminaries Static games in pure strategies Static games Best responses Representation Normal form for a Prisoners’ dilemma The normal form A 1 ’s BR for the PD Nash equilibrium NE in the PD Example 1, p494 Example 2, p45461 Example 3, p4767 Example 4, p47882 Conclusions ECON 201 6 / 45 The best response for a player is the choice that max imises (expected) payoffs for that player, given the choices made by other players. Best responses Chaps 13 & 14 Preliminaries Static games in pure strategies Static games Best responses Representation Normal form for a Prisoners’ dilemma The normal form A 1 ’s BR for the PD Nash equilibrium NE in the PD Example 1, p494 Example 2, p45461 Example 3, p4767 Example 4, p47882 Conclusions ECON 201 6 / 45 The best response for a player is the choice that max imises (expected) payoffs for that player, given the choices made by other players....
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 Fall '10
 PaulClacott
 Microeconomics, Game Theory, Oligopoly, Bertrand

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