ECON 1000 Lecture Notes - Lecture 23: Nash Equilibrium, Vise, Oligopoly

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Prisoners" dilemma: game theory: a way to study human relations. A way of thinking of human interactions by identifying players, their objectives, choices of moves and how the game plays out as they make their moves. Dominant strategy: in game theory when one thing that is best to do regardless of other variables. Nash equilibrium: 2 players; a pair of strategies, 1 choice for each, such that if one chooses the nash equilibrium then the other will rationally choose the nash equilibrium point for them and vise versa. Making this choice causes the most efficient outcome. Can use the prisoners" dilemma for oligarchies. Yes in oligarchy, both competing firms could be selfish and charge as they wish but if they work together to influence specific market outcomes both parties can profit. If they don"t work together than both will fail or lose profit, but if they work coherently all parties can maximize profits or have a pareto optimum by cooperation.

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