1. More Game Theory Rob Seamans & Richard Wang MBA 299: Strategy April 18 th , 2008
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3. Application of Prisoner’s Dilemma: Oil Production $70M,$60M $180M,$50M $160M,$100M $60M,$120M Increase Production Restrict Output Increase Production Restrict Output Saudi Arabia Iran Nash Equilibrium: Given what the other player is doing, you can’t do better by deviating
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14. Incumbent decides to expand or not, then rival decides whether to enter I R R 1,1 3,2 2,4 4,2 Expand Do not expand Enter Don’t Enter Enter Don’t Enter
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16. What will rival do? I R R 1,1 3,2 2,4 4,2 Expand Do not expand Enter Don’t Enter Enter Don’t Enter
17. Rival’s Choice I R R 1,1 3,2 2,4 4,2 Expand Do not expand Enter Don’t Enter Enter Don’t Enter
18. What will the Incumbent do? I R R 1,1 3,2 2,4 4,2 Expand Do not expand Enter Don’t Enter Enter Don’t Enter
19. Incumbent’s Choice I R R 1,1 3,2 2,4 4,2 Expand Do not expand Enter Don’t Enter Enter Don’t Enter
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22. Game Tree – Rival moves first, same payoffs R I I 1,1 4,2 2,3 2,4 Enter Don’t Enter Expand Not expand Expand Not expand
23. Game Tree – Rival moves first, same payoffs R I I 1,1 4,2 2,3 2,4 Enter Don’t Enter Expand Not expand Expand Not expand
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30. Signaling game 0,0 0,0 Business people Artists B School No B School B School No B School 3,2 3,1 -1,0 -2,0 2,2 1,1 50% 50% Nature H N H N H N H N
31. Signaling game - Equilibrium 0,0 0,0 Business people Artists B School No B School B School No B School 3,2 3,1 -1,0 -2,0 2,2 1,1 50% 50% Nature H N H N H N H N
32. Signaling game – No incentive to deviate by the business people 0,0 0,0 Business people Artists B School No B School B School No B School 3,2 3,1 -1,0 -2,0 2,2 1,1 50% 50% Nature H N H N H N H N EV=(3+0)/2=1.5
33. Signaling game – No incentive to deviate by the artists 0,0 0,0 Business people Artists B School No B School B School No B School 3,2 3,1 -1,0 -2,0 2,2 1,1 50% 50% Nature H N H N H N H N EV = (1-2)/2 = -0.5
![More game theory ,[object Object],[object Object],[object Object],[object Object]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)