Econ546MCLec2

Player i 16 2xi x bri x i 8 0 i 0 if x xi if

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Unformatted text preview: s&=&Revenue&8&Cost Pro0its&=&Price*Quantity&8&Cost ⇡i xi Best response function for player i? 16 2xi x BRi (x i ) = 8 =0 i =0 if x xi if x 2 otherwise 16 i i 16 C OURNOT D UOPOLY A Nash Equilibrium (x⇤ , x⇤ ) of this game must satisfy, 2 1 x⇤ = BRi (x⇤ i ) i x⇤ = x⇤ = 2 1 16 3 x^*_1&=&BR_1(x^*_2) x^*_2&=&BR_2(x^*_1) N ASH E QUILIBRIUM AND D OMINANCE All Nash Equilibria are contained in the set of outcomes that survive the iterated elimination of strictly dominated strategies. An implication, If a game is dominance solvable then it has a unique Nash Equilibrium. The converse? If a game has a unique Nash Equilibrium, is it dominance solvable? U M D L 1, 5 3, 0 5, 2 C 2, 3 4, 2 1, 4 R 7, 1 5,...
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This document was uploaded on 03/23/2014.

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