Week 3 - Oligolpolies and Game Theory Flashcards
1
Q
What is an oligopoly?
A
a collection of firms that are in a market that has serious barriers to entry, that act strategically with and against each other.
2
Q
What is Nash equilibrium?
A
Stopping point; maintaining same response
3
Q
What is Dominant strategy?
A
Any strategy chosen regardless of other player’s choices
4
Q
What is Sequential games?
A
Review end results first and so on (backward induction
5
Q
What is Simultaneously played games?
A
Can’t know other player’s move when you make your move
6
Q
What is the prisoner’s dilemma?
A
- Pressure criminal to confess.
- Corroborate stories of criminals.
you cannot have a prisoner’s dilemma without a dominant strategy.
7
Q
What is the Bertrand and Cournot Games…
A
two firms compete against each other in respect to price, getting into a price war against each other in respect to price.
- Price war will stop when both companies stop making a profit
- Both firms will reach their marginal costs when profit is no longer made ◦Zero profit is made with perfectly competitive firms
- Marginal costs are identical for both firms; they stop when they are setting the same price
