ECO200Y1 Lecture 10: Microeconomics Chapter 10

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28 Mar 2017
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ECO200Y1 Full Course Notes
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Sequential game: players take actions at different times, but the game itself is only once. Strategies may depend on outcome of previous stages. >sequential move games often look quite different from simultaneous move games. >equilibrium predictions can be different from the related simultaneous move games. Player 1 will play either heads, tails or randomize between the two. Player 2 will respond to what player 1 has chosen between the two. Player 2 will respond to c, meaning player 1 has a first-mover advantage. First-mover advantage is when there is advantage to moving first. A: across many games, moving first may take an incredible threat or promise, making it credible. Paradox of commitment: removing options might make you better off. Assume you have two firms rachel and joe. Because the outcome is symmetric, the resulting quantity for both firms is 16. Suppose rachel says to joe: i am going to produce 6 units next period, and you produce accordingly.

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