ECON 100B Lecture Notes - Lecture 5: Nordstrom, Nash Equilibrium, Game Players
24 Apr 2018
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Econ 100b lecture 5 - april 24, 2018. Game theory is the study of how people behave in strategic situations. Strategic decisions are those in which each person, in deciding what actions to take, must consider how others might respond to that action. Two firms competing in price and have an incentive to undercut the other firm to increase sales but the action will drive down profits for both. Your working on a joint project with your classmates. All of you have an incentive to shirk and watch a movie instead. However, the action will lead to a c in the project. A game is a situation where the participants" payoffs depend not only on their decisions, but also on their rivals" decisions. Strategies: when each player taken ac action, what are possible movies. Outcomes of the strategies: win or lose, profit or loss.
