Week 5

Question 1

Exclusionary behavior

Answer 1

entails denying rivals access to some resource or set of consumers in order to raise the rivals’ costs and weaken their ability to compete

Question 2

Predatory behavior

Answer 2

typically involves an initial stage during which a firm offers a product at an unprofitably low price as a means of driving rivals from the market and facilitating the later exercise of market power.

Question 3

Dominant strategy

Answer 3

strategy that gives the highest payoff regardless of the other player’s choices, i.e strategy that dominates all the others

Question 4

Iterated elimination of dominated strategies

Answer 4

If a strategy is strictly dominated, then it makes sense to rule it out as a possiblity for a rational player. Why would they choose that strategy when there is another strategy that is always better? Even eliminating weakly dominated strategies sounds quite reasonable. Iterated elimination of dominated strategies (IEDS) is a process in which we delete dominated strategies from a game.