ECO 211 Lecture Notes - Lecture 13: Strategic Dominance, Iden, Opata Language

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ECO 211 Full Course Notes
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Game--repeated or one-time event where players try to optimize something. Studied because it has implications of how firms behave, can be applied to firms. Nash equilibrium--equilibrium that results in a game where players optimize either by holding other player"s behaviors constant or in response to other players. Basically, you do best for you given what other player does. Cartel--group that gets together to act like monopolist (restrict output, raise price) Sometimes beneficial for players to collude (work together) Illegal for firms to collude in setting price or controlling output. Cournot--french mathematician, type of nash equilibrium where decision/optimizing variable is quantity of output; firm chooses output. Numbers are jail terms, b for bonnie, c for clyde. Assumes b & c taken captive, put in separate cells, told likely jail sentences by attorneys. Pick direction, horizontal or vertical, & freeze person"s behavior. Then, look at other person & see which is less. Ex: bonnie should confess because 5 years not 10.

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