ECON 2009 Chapter Notes - Chapter 12: Extensive-Form Game, Sequential Game, Strategic Dominance
28 Dec 2015
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Document Summary
Interactive when the consequence of a manager"s decision depends on both the manager"s own actions of other. The entity making decision: the strategy (actions) Only strategies given a nonzero probability of occurring are accessed: the outcomes or consequences. Each player has a feasible strategy set, and where al those meet is the combination that forms the outcome matrix: the payoffs. A model assigns a payoff for each player to all outcomes: the order of play. Simultaneous if a player commits to a strategy before knowing what the other will do. Extensive form that provides a road map of player decisions (or game trees) Game trees are another name for extensive form games and are akin to decision trees (strategic) Managers try to correctly anticipate the behaviour of others. Equilibrium when no player has an incentive to unilaterally change his or her strategy. Dominant strategies a strategy whose payout in any outcome is higher relative to all other feasible strategies.
