MGCR 293 Lecture Notes - Lecture 19: Sequential Game, Nash Equilibrium, Simultaneous Game
28 Nov 2016
School
Department
Course
Professor
Document Summary
Sequential (or dynamic) game is a game where later player has some knowledge about earlier players action. A game tree is a graphical representation of the consequences of alternative strategies. Firms can use it to develop pricing strategies. To analyze a sequential game, we construct a game tree mapping out all of the possibilities. Is a set of strategies such that each player believes accurately that it is doing the best it can given the strategy of other players. I"m doing my best given what you are doing. Not all games are games of conflict. Sequential moves can help solve coordination problems. Two prisoners: neither confesses= 3 years each, both confess= 10 years each, 1 confesses one doesn"t = 2 years for the one who does and 12 for the one who doesn"t. In repeated games between firms where prices are to be decided on ongoing basis, firms decisions to cooperate or not, give them a reputation.
