Chapter 11: GAME THEORY AND COMPETITIVE STRATEGY
1. Concepts of game theory
2. Examples of strategies
3. Competitive strategies
Reading: To p. 448
Problems: 3-8
WHAT YOU SHOULD BE ABLE TO DO
1. Continue with game theory from Chapter 10 with special emphasis on dominant/dominated strategies, the Prisoner's Dilemma, and the Nash equilibrium.
2. Deal with zero-sum games.
EXAMPLES
1.
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a. Does either firm have a dominant strategy?
b. Does either firm have a dominated strategy?
c. Explain why (R,X) is not an equilibrium.
d. Find the equilibrium. Explain.
2. The following is a payoff matrix for a zero sum game.
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a. If A selects S and B selects Y, A earns ____ and B earns _____.
b. Does either firm have a dominant strategy?
c. Determine the equilibrium.
d. Suppose A adopts a mini-max strategy, what will it choose?