Econ 1000 – Week 12 Lecture 23
o Game Theory: a way to study human relations
Cuts across disciplines
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.
Can be used for economics.
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 t