Strategic Interdependance And The Theory Of Games Flashcards
The kinked demand curve and Cournot models make special assumptions about what?
Strategic interdependence of oligopolists.
How can such strategic interdependence be analysed?
Using game theory.
What is a strictly dominant strategy?
A strategy is dominated if, regardless of what any other players do, the strategy earns a player a smaller payoff than some other strategy. Hence, a strategy is dominated if it is always better to play some other strategy, regardless of what opponents may do.
What is the solution to the prisoners dilemma?
Iterative elimination of strictly dominated strategies.
What is a game that yields a single solution using that method called?
Dominance solvable.
What is a Nash equilibrium
A solution to a game that no such player, assuming other players strategies to be fixed, can unilaterally improve her own payoff.
Examples of Nash equilibria can be found in?
The prisoners dilemma.
In pure strategies, is there any Nash equilibria?
No.
What is the Cournot equilibrium?
Where the reaction functions intersect, each firm takes the other firm’s output as given, and each firm’s response is optimal given the other firm’s action.
Games involving sequential decision marking can be analysed using…?
Decision trees.
An example of games involving sequential decision making is …?
The ultimatum game.
