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lecture2_Games - I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED...

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I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED I NDUSTRIAL ORGANISATION (2011) T OPIC 2: G AME THEORY Nicolas de Roos 1 1 School of Economics University of Sydney I NDUSTRIAL ORGANISATION (2011) T OPIC 2: G AME THEORY
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I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED O UTLINE I NTRODUCTION Basics S IMULTANEOUS MOVE GAMES Overview S EQUENTIAL MOVE GAMES Overview R EPEATED GAMES Overview I NDUSTRIAL ORGANISATION (2011) T OPIC 2: G AME THEORY
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I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED I NTRODUCTION Oligopoly small number of firms could be differentiated or homogeneous product barriers to entry strategic interaction between firms is crucial Game theory analysis of the strategic interaction between agents the payoff to an agent depends on her own actions as well as those of others We will consider static games of complete information I NDUSTRIAL ORGANISATION (2011) T OPIC 2: G AME THEORY
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I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED C OMPONENTS OF A GAME players, i = 1 , . . . , n actions, a , (eg prices or quantities or advertising) strategies, s complete contingent plan of action information available to players we will assume perfect information rules of the game payoffs, π ( s ) I NDUSTRIAL ORGANISATION (2011) T OPIC 2: G AME THEORY
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I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED R EPRESENTING GAMES normal form representation payoffs are contained in a matrix of cells rows correspond to actions or strategies of Player 1 columns correspond to actions or strategies of Player 2 in each cell Player 1’s payoff is on the left Player 2’s payoff is on the right usually used for simultaneous move games I NDUSTRIAL ORGANISATION (2011) T OPIC 2: G AME THEORY
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I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED E XAMPLE : THE GAME OF CHICKEN Two “hoons” speed toward each other on a narrow road. the first to swerve is a “chicken” if neither swerves, neither makes it home for dinner F IGURE : Chicken in normal form Driver 1 Driver 2 straight swerve straight - 100 , - 100 1 , - 1 swerve - 1 , 1 0 , 0 I NDUSTRIAL ORGANISATION (2011) T OPIC 2: G AME THEORY
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I NTRO S IMULTANEOUS S EQUENTIAL R EPEATED R EPRESENTING GAMES extensive form representation the game is represented by a tree the order of play is made explicit nodes represent decisions branches represent actions information sets indicate nodes that can’t be distinguished usually used for sequential move games Can we represent the game of chicken in extensive form?
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