445 Ch 9

445 Ch 9 - Game Theory: is the branch of social science...

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Game Theory:  is the branch of social science that formally analyzes and models  strategic decisions.  Game theory is divided into two branches:  Non-cooperative  and  cooperative  games In  non-cooperative games , the unit of analysis is the individual decision market or  player (firm) In  cooperative games,  takes the unit analysis to be a group or coalition of players, a  group of firms.  Assumptions and Conventions: 1. Games are played non-cooperatively:  Players act in their own best interest.  2. Firms are rational:  Players know their preferences and pursue them  intelligently. This facilitates prediction within games 3. Common knowledge about rules and structure:  there is the process of  reasoning strategically.  4. Players are risk-neutral 9.1 Strategic Interaction: Introduction to Game Theory Strategy:  A comprehensive plan of actions.  Equilibrium:  A strategy combination such that no firm has an incentive to change the 
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This note was uploaded on 02/23/2012 for the course ECON 445 taught by Professor Mcmanus during the Summer '08 term at UNC.

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445 Ch 9 - Game Theory: is the branch of social science...

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