Game Theory Flashcards
1
Q
Dominant stragergy
A
In Game theory, the most rewarding option for a ‘player’ to pursue
(The best thing to do given the other persons options)
2
Q
Nash equilibrium
A
No one can improve outcome by changing there own decision
3
Q
Contestable markets characteristics
A
Number of firms is irrelelvent
Firms compete and do not collude
Firms are short run profit maximisers
Goods may be homogenous/diffrentiatied
Perfect knowledge exists
4
Q
Barriers to entry for a Contestable market
A
Large set up costs
Eos (prevents firms competing on price)
Natural cost advantages
Legal barriers
Marketing barriers and branding
Sunk costs
