CAS EC 101 Lecture Notes - Lecture 21: Nash Equilibrium, Coordination Game, Solution Concept

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Michael Manove

Document Summary

Monopolies also do not have strategic interaction with competitors (unless there are potential entrants, they have no competitors) Strategic interaction is very important when a small number of people or firms engage in bargaining, conflict, or competition: duopoly (two competing firms, oligopoly (several competing firms, contracts, legal disputes, political campaigns. Game theory: a set of mathematical tools to analyze strategic interaction. Often applies in economics, political science, and military science. But game theory is not commonly applies to ordinary games: players (decision makers, strategies (complete plans of actions, payoffs (rewards or punishments from strategies, there must be at least two players. Strategies: a complete plan that described the action a player will take in every circumstance that she can observe. Sometimes a strategy only involves a single action (ex: i"ll ask my boss for a raise ) But some strategies are complex plans that involve many possible actions (military strategies)