ECN 101 Lecture Notes - Lecture 13: Nash Equilibrium, Simultaneous Game, Strategic Dominance
21 Feb 2018
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Document Summary
One-time game a game in which firms select their optimal strategy in a single time period without regard to possible interactions in subsequent time periods. Simultaneous game- a game in which both parties choose their strategies and execute them at the same time. Positive sum game- a game in which the gains (+) and (-) add up to more than zero. Fir(cid:373)"s dominant strategy- in game theory, an option that is better than any alternative option regardless of what the other firm does. Nash equilibrium- in game theory, an outcome from which neither firm wants to deviate; the outcome that once achieved is stable and therefore lasting: only outcome that is considered stable and therefore will continue to persist. Credible threats a statement of harmful intent by one party that the other party views as believable: can establish collusive agreements, a strong enforcer can prevent cheating, generate higher profits, may be countered with threat by rival.
