Here are payoff matrices for some of the game theory scenarios:
Student helping partner:
Partner studies Partner doesn't study
Student helps Partner gets A, Student gets B Partner gets F, Student gets C
Student doesn't help Partner gets C, Student gets D Partner gets F, Student gets D
A's owner moving team:
Oakland builds stadium Oakland doesn't build stadium
Owner moves team Loss of fans and money, profit of $500m Profit of $1b
Owner stays Loss of $200m, fans stay Loss of $500m
Coke advertising:
Coke advertises Coke doesn't advertise
Pepsi advertises Profit of $1b each Profit of
This document discusses behavioral economics and game theory. It explains that behavioral economics explores irrational human decision-making, bounded rationality, inconsistencies like framing effects, and judgments of fairness. Game theory analyzes strategic interaction using concepts like the prisoner's dilemma, dominant strategies, and Nash equilibria. The prisoner's dilemma shows how rational decisions can lead to suboptimal outcomes. Cooperation is difficult in short-run interactions but strategies like tit-for-tat can promote cooperation in long-run relationships where parties are invested in each other.
This document discusses game theory concepts including dominant strategies, Nash equilibrium, prisoner's dilemma, and repeated games. It provides examples of how companies could use game theory to determine pricing strategies. In a prisoner's dilemma scenario where two suspects can confess or not confess, confessing dominantly dominates as the strategy. However, in repeated games firms can adopt a cooperative "tit for tat" strategy and set high prices to maximize joint profits in a Nash equilibrium.
The presentation discusses game theory and strategies for negotiation. It covers topics such as the prisoner's dilemma, Nash equilibriums, dominant strategies, screening techniques, and how perception of rational versus irrational behavior can impact outcomes. Game theory concepts like threats and promises are examined in the context of achieving cooperative outcomes versus outcomes based on rational self-interest.
1) Game theory analyzes strategic decision-making between players in situations called games. Games can be modeled using normal or extensive form.
2) In normal form, all choices are made simultaneously. Players choose strategies and receive payoffs. Dominant strategies and dominance can be identified.
3) Extensive form models sequential choices using game trees. Backward induction analyzes the game moving backwards in time from end to start. Imperfect information means some information is unknown.
Game theory is a set of principles for analyzing strategic interactions between multiple agents acting in their own self-interest. The document discusses how game theory can be applied to macroeconomic investing by analyzing the objectives, bargaining powers, and modes of action of players in sequential interactions such as debt ceiling negotiations and conflicts between countries. William Blair uses game theory in its approach to macro investing by considering these factors in international negotiations and other strategic interactions between economic players.
The document discusses market structures and oligopoly behavior through a game theory lens. It begins by introducing the four main market models: pure competition, monopolistic competition, oligopoly, and pure monopoly. It then examines the characteristics of monopolistic competition and oligopoly in more detail. For oligopolies, it discusses concentration measures, mutual interdependence, and collusive tendencies. It provides an example game theory payoff matrix to illustrate how firms may interact in an oligopoly and gravitate towards less competitive outcomes without collusion. Overall, the document uses game theory to analyze the strategic interactions between firms in oligopolistic markets.
The document discusses game theory analysis of the 2000 UK 3G mobile phone license auction. It provides background on game theory concepts like dominant strategies and Nash equilibrium. It then summarizes the key aspects of the 3G spectrum auction, including that it involved 13 bidders including existing mobile operators, bids were submitted secretly by fax, and it lasted over 150 rounds. It notes that game theorist Kenneth Binmore helped design the auction which netted the UK government £22 billion. Matrices are presented to model bidding strategies between two bidders.
1) The document discusses how Apple, Google, and Microsoft have used competitive strategies against each other in different technology areas like internet search, mobile advertising, software, smartphones, and music players.
2) It analyzes their relationships and competitive interactions over time in these areas using principles of game theory, such as strategic foresight, understanding their own and others' strengths, and differentiating between one-time and repeated interactions.
3) However, it notes that real-world behavior is more complex than game theory assumptions due to factors like personal relationships, distrust between companies, and changing business strategies.
This document discusses behavioral economics and game theory. It explains that behavioral economics explores irrational human decision-making, bounded rationality, inconsistencies like framing effects, and judgments of fairness. Game theory analyzes strategic interaction using concepts like the prisoner's dilemma, dominant strategies, and Nash equilibria. The prisoner's dilemma shows how rational decisions can lead to suboptimal outcomes. Cooperation is difficult in short-run interactions but strategies like tit-for-tat can promote cooperation in long-run relationships where parties are invested in each other.
This document discusses game theory concepts including dominant strategies, Nash equilibrium, prisoner's dilemma, and repeated games. It provides examples of how companies could use game theory to determine pricing strategies. In a prisoner's dilemma scenario where two suspects can confess or not confess, confessing dominantly dominates as the strategy. However, in repeated games firms can adopt a cooperative "tit for tat" strategy and set high prices to maximize joint profits in a Nash equilibrium.
The presentation discusses game theory and strategies for negotiation. It covers topics such as the prisoner's dilemma, Nash equilibriums, dominant strategies, screening techniques, and how perception of rational versus irrational behavior can impact outcomes. Game theory concepts like threats and promises are examined in the context of achieving cooperative outcomes versus outcomes based on rational self-interest.
1) Game theory analyzes strategic decision-making between players in situations called games. Games can be modeled using normal or extensive form.
2) In normal form, all choices are made simultaneously. Players choose strategies and receive payoffs. Dominant strategies and dominance can be identified.
3) Extensive form models sequential choices using game trees. Backward induction analyzes the game moving backwards in time from end to start. Imperfect information means some information is unknown.
Game theory is a set of principles for analyzing strategic interactions between multiple agents acting in their own self-interest. The document discusses how game theory can be applied to macroeconomic investing by analyzing the objectives, bargaining powers, and modes of action of players in sequential interactions such as debt ceiling negotiations and conflicts between countries. William Blair uses game theory in its approach to macro investing by considering these factors in international negotiations and other strategic interactions between economic players.
The document discusses market structures and oligopoly behavior through a game theory lens. It begins by introducing the four main market models: pure competition, monopolistic competition, oligopoly, and pure monopoly. It then examines the characteristics of monopolistic competition and oligopoly in more detail. For oligopolies, it discusses concentration measures, mutual interdependence, and collusive tendencies. It provides an example game theory payoff matrix to illustrate how firms may interact in an oligopoly and gravitate towards less competitive outcomes without collusion. Overall, the document uses game theory to analyze the strategic interactions between firms in oligopolistic markets.
The document discusses game theory analysis of the 2000 UK 3G mobile phone license auction. It provides background on game theory concepts like dominant strategies and Nash equilibrium. It then summarizes the key aspects of the 3G spectrum auction, including that it involved 13 bidders including existing mobile operators, bids were submitted secretly by fax, and it lasted over 150 rounds. It notes that game theorist Kenneth Binmore helped design the auction which netted the UK government £22 billion. Matrices are presented to model bidding strategies between two bidders.
1) The document discusses how Apple, Google, and Microsoft have used competitive strategies against each other in different technology areas like internet search, mobile advertising, software, smartphones, and music players.
2) It analyzes their relationships and competitive interactions over time in these areas using principles of game theory, such as strategic foresight, understanding their own and others' strengths, and differentiating between one-time and repeated interactions.
3) However, it notes that real-world behavior is more complex than game theory assumptions due to factors like personal relationships, distrust between companies, and changing business strategies.
A monopoly is characterized by a single firm controlling the entire market for a good or service with no close substitutes. This allows the firm to set prices without competition. While monopolies can benefit from economies of scale, they also restrict output to raise prices and profits, resulting in an inefficient allocation of resources and loss of consumer welfare. Modern examples include electricity distribution networks and Google's dominance as a search engine.
1) A monopoly is a market structure with a single seller of a product without close substitutes.
2) The key characteristics of a monopoly are that it is the sole price maker and faces a downward sloping demand curve, unlike competitive firms which are price takers.
3) Barriers to entry, such as government licenses, large economies of scale, or ownership of key resources allow monopolies to exist by preventing competition from entering the market.
This document discusses oligopolies and game theory. It explains that when there are few dominant firms in a market, they can engage in practices like price fixing to restrict output and fix higher prices. This allows them to recognize their interdependence and act together to maximize joint profits. However, cartel agreements are often unstable as firms have an incentive to cheat and exceed their output quotas for higher individual profits. This prisoners' dilemma framework illustrates why cooperation is difficult even when it benefits all parties. Game theory models are useful for understanding interdependent pricing and other strategic decisions in oligopolistic markets.
This presentation is an attempt to introduce Game Theory in one session. It's suitable for undergraduates. In practice, it's best used as a taster since only a portion of the material can be covered in an hour - topics can be chosen according to the interests of the class.
The main reference source used was 'Games, Theory and Applications' by L.C.Thomas. Further notes available at: http://bit.ly/nW6ULD
Students should be able to:
Use simple game theory to illustrate the interdependence that exists in oligopolistic markets
Understanding the prisoners’ dilemma and a simple two firm/two outcome model. Students should analyse the advantages/disadvantages of being a first mover
Students will not be expected to have an understanding of the Nash Equilibrium
what is monopoly, its characteristics, probable cause & equilibrium price and output in short n long run.
u can mail me ur views on rajeshkr.1128@gmail.com
Compliance settings, formerly known as DCM, remains one of the often unexplored features in Configuration Manager. During this session we will walk through the new capabilities and improvements of this feature in ConfigMgr 2012, discuss implementation details, and demonstrate how you can start using it to fulfill actual business requirements.
Pivotal deep dive_on_pivotal_hd_world_class_hdfs_platformEMC
The document discusses Pivotal HD, a Hadoop distribution from Pivotal. It provides an overview of key features of Pivotal HD 2.0 including improved support for real-time analytics using Gemfire XD, enhanced machine learning and SQL capabilities, and integration with the Isilon storage platform. The presentation highlights how Pivotal HD can help customers build a "data lake" to store all of their data and gain insights to create new data-driven services and applications.
White Paper: Using VMware Storage APIs for Array Integration with EMC Symmetr...EMC
This white paper discusses how VMware's vSphere Storage APIs for Array Integration, also known as VAAI, can be used to offload perform various virtual machine operations on the EMC Symmetrix.
Dedupe-Centric Storage for General Applications EMC
Proliferation and preservation of many versions and copies of data drives much of the tremendous data growth most companies are experiencing. IT administrators are left to deal with the consequences. Because deduplication addresses one of the key elements of data growth, it should be at the heart of any data management strategy. This paper demonstrates how storage systems can be built with a deduplication engine powerful enough to become a platform that general applications can leverage.
The document discusses ways to stay healthy and avoid illness by addressing emotions, making decisions, finding solutions, accepting oneself, trusting others, and maintaining a positive outlook. Repressing feelings can lead to illnesses, while speaking with confidantes provides therapy. Indecision causes stress-related ailments, and finding solutions prevents enlarging problems. Living beyond one's means and focusing on appearances takes a physical toll. Accepting oneself and criticism promotes well-being. Lacking trust prevents relationships and good health. Maintaining happiness through humor, laughter, and rest nourishes the body and brings long life.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms for those who already suffer from conditions like anxiety and depression.
This Solution Guide describes the data protection operations and services provided as a modular add-on to the EMC Enterprise Hybrid Cloud 2.5.1, Federation SDDC Edition: Backup Solution Guide.
The document discusses work-life balance and its importance. It defines work-life balance as the perfect integration between work and life without interference. Poor work-life balance can lead to stress, physical and relational problems, decreased performance, and disturbed families. Achieving work-life balance requires planning work and providing flexibility, empathetic leadership, training programs, effective communication, and time/stress management. Both organizations and employees must work together to develop strategies to help attain work-life balance.
The document provides examples of journal entries for various business transactions for multiple individuals over different periods of time. It begins by outlining the purpose and components of a journal, including the meaning, importance, structure, and journalizing process. It then provides 6 examples with numerous transactions each month to journalize, including purchasing/selling goods and assets, payments/receipts, deposits/withdrawals, wages, and introducing/withdrawing capital. The goal is to practice recording business transactions in journal entry format.
This white paper from Goode Intelligence explores how existing provisioning solutions are failing to support the business in an era where new IT service models are rapidly being deployed. New IT service models that support mobile and cloud computing have created problems for organizations that are already struggling with outdated identity and access governance tools. The paper explores a vision for Provisioning 2.0 where the goal is to weave provisioning into the very fabric of business process. Provisioning 2.0 is business driven, is easy to deploy and maintain and is built for today’s agile IT.
Niger's capital is Niamey. It borders 7 countries in Western Africa and has a mostly dry, hot and dusty climate. The population of Niger is over 16 million people who are predominantly Muslim and speak French, Djerma and Hausa languages.
This document provides an overview of topics in game theory and competitive strategy that will be discussed in Chapter 13, including gaming and strategic decisions, dominant strategies, the Nash equilibrium, repeated games, sequential games, threats and commitments, entry deterrence, bargaining strategy, and auctions. It presents examples and concepts such as noncooperative vs cooperative games, the prisoner's dilemma, mixed strategies, and analyses of specific market situations involving pricing, location choice, and oligopolistic cooperation.
This document summarizes key concepts around game theory and Nash equilibria. It discusses how Nash equilibria arise from players playing best responses to each other's strategies and having no incentive to unilaterally change. Examples shown include the Prisoner's Dilemma game and SUV price wars. The document also discusses how rationalizable strategies can form Nash equilibria and covers evolutionary game theory concepts like how populations can evolve to a mixed strategy equilibrium over time.
Chapter 6 - Strategic decision in business.pdfMaiSng14
This document discusses game theory and its application to oligopolies. It begins by defining key game theory concepts like the players, strategies, payoffs, and the order of moves in games. It then explains how the prisoner's dilemma relates to oligopolies, with firms facing a temptation to defect from collusion for higher individual profits. Repeated games and the potential for retaliation can help support collusion. Entry deterrence is also examined using game theory. Overall, the document uses various game theory examples and models to analyze strategic decision-making and competition among oligopolistic firms.
A monopoly is characterized by a single firm controlling the entire market for a good or service with no close substitutes. This allows the firm to set prices without competition. While monopolies can benefit from economies of scale, they also restrict output to raise prices and profits, resulting in an inefficient allocation of resources and loss of consumer welfare. Modern examples include electricity distribution networks and Google's dominance as a search engine.
1) A monopoly is a market structure with a single seller of a product without close substitutes.
2) The key characteristics of a monopoly are that it is the sole price maker and faces a downward sloping demand curve, unlike competitive firms which are price takers.
3) Barriers to entry, such as government licenses, large economies of scale, or ownership of key resources allow monopolies to exist by preventing competition from entering the market.
This document discusses oligopolies and game theory. It explains that when there are few dominant firms in a market, they can engage in practices like price fixing to restrict output and fix higher prices. This allows them to recognize their interdependence and act together to maximize joint profits. However, cartel agreements are often unstable as firms have an incentive to cheat and exceed their output quotas for higher individual profits. This prisoners' dilemma framework illustrates why cooperation is difficult even when it benefits all parties. Game theory models are useful for understanding interdependent pricing and other strategic decisions in oligopolistic markets.
This presentation is an attempt to introduce Game Theory in one session. It's suitable for undergraduates. In practice, it's best used as a taster since only a portion of the material can be covered in an hour - topics can be chosen according to the interests of the class.
The main reference source used was 'Games, Theory and Applications' by L.C.Thomas. Further notes available at: http://bit.ly/nW6ULD
Students should be able to:
Use simple game theory to illustrate the interdependence that exists in oligopolistic markets
Understanding the prisoners’ dilemma and a simple two firm/two outcome model. Students should analyse the advantages/disadvantages of being a first mover
Students will not be expected to have an understanding of the Nash Equilibrium
what is monopoly, its characteristics, probable cause & equilibrium price and output in short n long run.
u can mail me ur views on rajeshkr.1128@gmail.com
Compliance settings, formerly known as DCM, remains one of the often unexplored features in Configuration Manager. During this session we will walk through the new capabilities and improvements of this feature in ConfigMgr 2012, discuss implementation details, and demonstrate how you can start using it to fulfill actual business requirements.
Pivotal deep dive_on_pivotal_hd_world_class_hdfs_platformEMC
The document discusses Pivotal HD, a Hadoop distribution from Pivotal. It provides an overview of key features of Pivotal HD 2.0 including improved support for real-time analytics using Gemfire XD, enhanced machine learning and SQL capabilities, and integration with the Isilon storage platform. The presentation highlights how Pivotal HD can help customers build a "data lake" to store all of their data and gain insights to create new data-driven services and applications.
White Paper: Using VMware Storage APIs for Array Integration with EMC Symmetr...EMC
This white paper discusses how VMware's vSphere Storage APIs for Array Integration, also known as VAAI, can be used to offload perform various virtual machine operations on the EMC Symmetrix.
Dedupe-Centric Storage for General Applications EMC
Proliferation and preservation of many versions and copies of data drives much of the tremendous data growth most companies are experiencing. IT administrators are left to deal with the consequences. Because deduplication addresses one of the key elements of data growth, it should be at the heart of any data management strategy. This paper demonstrates how storage systems can be built with a deduplication engine powerful enough to become a platform that general applications can leverage.
The document discusses ways to stay healthy and avoid illness by addressing emotions, making decisions, finding solutions, accepting oneself, trusting others, and maintaining a positive outlook. Repressing feelings can lead to illnesses, while speaking with confidantes provides therapy. Indecision causes stress-related ailments, and finding solutions prevents enlarging problems. Living beyond one's means and focusing on appearances takes a physical toll. Accepting oneself and criticism promotes well-being. Lacking trust prevents relationships and good health. Maintaining happiness through humor, laughter, and rest nourishes the body and brings long life.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms for those who already suffer from conditions like anxiety and depression.
This Solution Guide describes the data protection operations and services provided as a modular add-on to the EMC Enterprise Hybrid Cloud 2.5.1, Federation SDDC Edition: Backup Solution Guide.
The document discusses work-life balance and its importance. It defines work-life balance as the perfect integration between work and life without interference. Poor work-life balance can lead to stress, physical and relational problems, decreased performance, and disturbed families. Achieving work-life balance requires planning work and providing flexibility, empathetic leadership, training programs, effective communication, and time/stress management. Both organizations and employees must work together to develop strategies to help attain work-life balance.
The document provides examples of journal entries for various business transactions for multiple individuals over different periods of time. It begins by outlining the purpose and components of a journal, including the meaning, importance, structure, and journalizing process. It then provides 6 examples with numerous transactions each month to journalize, including purchasing/selling goods and assets, payments/receipts, deposits/withdrawals, wages, and introducing/withdrawing capital. The goal is to practice recording business transactions in journal entry format.
This white paper from Goode Intelligence explores how existing provisioning solutions are failing to support the business in an era where new IT service models are rapidly being deployed. New IT service models that support mobile and cloud computing have created problems for organizations that are already struggling with outdated identity and access governance tools. The paper explores a vision for Provisioning 2.0 where the goal is to weave provisioning into the very fabric of business process. Provisioning 2.0 is business driven, is easy to deploy and maintain and is built for today’s agile IT.
Niger's capital is Niamey. It borders 7 countries in Western Africa and has a mostly dry, hot and dusty climate. The population of Niger is over 16 million people who are predominantly Muslim and speak French, Djerma and Hausa languages.
This document provides an overview of topics in game theory and competitive strategy that will be discussed in Chapter 13, including gaming and strategic decisions, dominant strategies, the Nash equilibrium, repeated games, sequential games, threats and commitments, entry deterrence, bargaining strategy, and auctions. It presents examples and concepts such as noncooperative vs cooperative games, the prisoner's dilemma, mixed strategies, and analyses of specific market situations involving pricing, location choice, and oligopolistic cooperation.
This document summarizes key concepts around game theory and Nash equilibria. It discusses how Nash equilibria arise from players playing best responses to each other's strategies and having no incentive to unilaterally change. Examples shown include the Prisoner's Dilemma game and SUV price wars. The document also discusses how rationalizable strategies can form Nash equilibria and covers evolutionary game theory concepts like how populations can evolve to a mixed strategy equilibrium over time.
Chapter 6 - Strategic decision in business.pdfMaiSng14
This document discusses game theory and its application to oligopolies. It begins by defining key game theory concepts like the players, strategies, payoffs, and the order of moves in games. It then explains how the prisoner's dilemma relates to oligopolies, with firms facing a temptation to defect from collusion for higher individual profits. Repeated games and the potential for retaliation can help support collusion. Entry deterrence is also examined using game theory. Overall, the document uses various game theory examples and models to analyze strategic decision-making and competition among oligopolistic firms.
This document discusses key concepts in game theory and provides examples of how game theory can be applied to economics. It covers topics like the prisoner's dilemma, pricing games between firms, and evaluating factors like first mover advantage. Examples are given around oil markets, price wars, and advertising spending. Limitations of game theory are noted, such as its tendency to oversimplify complex business decisions.
Oligopoly content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Intro to Oligopoly
Non-Cooperative Strategy I: The Kinked Demand Curve Model
Non-Cooperative Strategy II: Game Theory
Cooperative Strategy: Collusion & Cartels
Non-price Competition
This document discusses concepts from behavioral finance including biases and irrational behaviors that traditional finance models do not account for. Some key points:
- Prospect theory proposes that people are risk-averse over gains but risk-seeking over losses due to loss aversion. Reference points also impact risk preferences.
- Experiments demonstrate biases like the disposition effect where people prefer to sell winners and hold losers, violating the dominance axiom. Framing of outcomes also influences choices.
- Regret theory suggests people make decisions to minimize anticipated regret even if it leads to suboptimal choices. Omission bias contributes to this where avoiding action that could lead to loss or harm is preferred.
- While traditional models assume rationality,
- Game theory is a technique used to analyze strategic interactions between players where individuals or organizations have conflicting objectives.
- Players are decision makers, strategies are courses of action, and payoffs are the outcomes of strategies. Players aim to optimize their strategies.
- Types of games include constant-sum, zero-sum, positive-sum, and negative-sum games. Cooperative games involve coordinated player strategies.
- Interdependence is key to games, which can be sequential or simultaneous. Simultaneous games are solved using Nash equilibrium concepts.
- The prisoner's dilemma and advertising games are examples used to illustrate game theory concepts like dominant strategies and Nash equilibria.
This document discusses strategic pricing in oligopolistic markets. It explains that in these markets, firms are often afraid to change prices because they do not know how competitors will respond. If other firms follow a price change, demand becomes relatively inelastic. The document also discusses game theory concepts like the prisoner's dilemma and dominant strategies to analyze strategic decision-making between firms.
This document provides an overview of game theory concepts through examples from business and economics. It discusses:
1) Game theory analyzes strategic interactions where the outcomes of actions depend on the actions of others. Examples include pricing decisions between competitors and movie release dates.
2) Games involve players, strategies, and payoffs. Players consider their optimal strategies given what other players may do.
3) Equilibrium occurs when no player has an incentive to unilaterally change their strategy, given the strategies of others.
4) Games can involve simultaneous or sequential moves. In simultaneous move games, players act without knowing others' actions, while sequential games allow looking ahead to future responses.
Game theory is a study of strategic decision making. Specifically, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers"
This document provides an overview of key concepts in game theory and oligopoly models. It discusses oligopoly market structures where a few firms account for most production. It also covers the Cournot and Bertrand models of oligopoly competition. The document explores game theory concepts such as the prisoner's dilemma, Nash equilibrium, dominant strategies, and repeated games. It examines how these concepts apply to oligopolistic pricing behaviors and the implications of threats, commitments and credibility in strategic interactions between firms.
Prisoner's Dilemma is a paradox in decision analysis in which two individuals acting in their own best interest pursue a course of action that does not result in the ideal outcome. The typical prisoner's dilemma is set up in such a way that both parties choose to protect themselves at the expense of the other participant. As a result of following a purely logical thought process to help oneself, both participants find themselves in a worse state than if they had cooperated with each other in the decision-making process.
In this session, we will be looking at The Prisoner's Dilemma and how it affects our decision making, group and team dynamics, business decisions. We'll look at real world case studies and nature with a goal of understanding this dilemma better.
This document discusses oligopoly and strategic behavior in markets. It begins by defining oligopoly as a market structure with a small number of firms, differentiated products, significant entry barriers, and where firms interact strategically. It then explores duopoly and shows how firms in a duopoly market may collude like a joint monopoly or compete by lowering prices. Game theory, like the prisoner's dilemma, is presented as a way to understand strategic interactions between oligopolists.
This section addresses some of the social dilemmas that currently affect humanity on a global scale. We will see how game theory has provided tools to study them scientifically, and how cooperation theory is looking for a way out of them.
Cooperation theory research and proposals are grouped into three major areas: strategic, institutional and motivational.
We also review some global dilemmas to understand their inner dynamics, what would have to be done to correct them, and what obstacles there are to achieving this.
This document provides an overview of game theory concepts and applications. It discusses why game theory is useful for analyzing strategic interactions between rational decision-makers. Examples are given of games that individuals and businesses play, such as coordination games, prisoner's dilemmas, mixed strategies, repeated games, and more. The document also summarizes a case involving Toys "R" Us restricting toy manufacturers from selling to warehouse clubs to prevent further growth of those competitors. It prompts the reader to consider what actions they would take in that situation and how to properly define the strategic game being played.
The document discusses oligopolies, which are market structures with only a few firms. It notes that oligopolies exist between perfect competition and pure monopoly. Oligopolies are characterized by interdependent firms that would benefit from cooperation to behave like a monopolist, but finding and maintaining cooperation can be difficult due to tensions between self-interest and joint interests. The document uses examples like duopolies, cartels, and game theory models to illustrate challenges around cooperation in oligopolistic markets.
Salespeople and customers are both biased. How can we use this to better satisfy the customer's needs while improving the profitability of our businesses? This presentation explains how.
Andrew Hingston
This document provides an overview of game theory concepts including repeated games, sequential games, and signaling games. It discusses how these concepts can be applied to scenarios like price wars between Coke and Pepsi (repeated games) and entry deterrence games between incumbents and potential competitors (sequential games). It also provides an example of how business school can act as a credible signal in a labor market signaling game.
Introduction to Competition Economics - Lecture 2Luke Wainscoat
This document provides an overview of game theory concepts and their application to competition economics. It discusses static and dynamic games, including the prisoner's dilemma, Nash equilibrium, and backward induction. Models of oligopoly including Bertrand price competition and Cournot quantity competition are presented. Applications explored include entry deterrence, predatory pricing, repeated prisoner's dilemma for collusion. Effective anti-collusion measures like leniency programs are also summarized.
NASA is soliciting proposals from private companies to build a new rocket in 1960. Companies should submit a 5 part proposal including price. NASA will be the sole purchaser of rockets.
The three market structures are perfect competition, monopolistic competition, and oligopoly. They seem to depend on the number of firms in the industry and level of product differentiation. Oligopoly is characterized by having a few large firms, similar but not identical products, and interdependent decision making. The concentration ratio measures the percentage of total market output produced by the top four firms, with higher ratios indicating less competition. Several US industries have very high concentration ratios, including video game consoles at 100% and credit cards at 99%.
This document discusses different types of economic efficiency including allocative efficiency, productive efficiency, and dynamic efficiency. It examines these efficiencies in the context of perfect competition, monopoly, and monopolistic competition market structures. Productive efficiency refers to producing at lowest cost while dynamic efficiency involves reinvesting supernormal profits into lowering costs further. The document considers which market structure results in each type of efficiency.
This document contains snippets of text from various sources discussing economic concepts like market structures, competition, and costs. It includes brief explanations of perfect competition, monopolistic competition, oligopoly, and monopoly market types. Students are asked questions about different markets and perfect competition. Graphs are shown for perfect competition, monopolistic competition, and marginal revenue under monopolistic competition with deadweight loss.
This document discusses the Reformation period in Christianity between 500-1500 AD. It provides background that during this time all Christians were Catholic, led by the Pope and bishops. The priests sold indulgences claiming they could reduce time in purgatory. Martin Luther protested the Catholic Church's corruption in 1517, sparking the Protestant reformation. Luther and other reformers disagreed with practices like selling indulgences and wanted people to be able to read the Bible in their own language. The document examines key figures and events of the Reformation like Martin Luther, his 95 Theses, and the new Protestant churches that formed.
This document discusses demand for lifesaving pharmaceuticals and the pricing of drugs under a monopoly. It asks how the demand curve would look if a firm had a patent on a cure for cancer and what deadweight loss would be. It also asks if such a firm should be allowed to charge any price and how quantity supplied would change if the firm price discriminated. The document then provides a graph showing the transition from a monopoly market to a competitive market when a drug patent expires and generics enter. It asks about other similar markets and provides links about copyright and public domain works.
This document discusses the concept of price discrimination. It begins by defining price discrimination as selling the same good at different prices to different buyers based on their willingness to pay. It provides examples such as student/senior discounts and differences in airline ticket prices. The document explains that under perfect price discrimination, a monopolist can capture all consumer surplus as profit and eliminate deadweight loss. However, in reality firms can only imperfectly discriminate by dividing customers into groups based on observable traits related to willingness to pay. It concludes by asking questions about whether price discrimination should always be illegal and discussing the "Soup Nazi" character from Seinfeld.
This document discusses monopolies and public policy related to monopolies. It begins by explaining the key characteristics of a monopoly market, including that a monopoly has total pricing power as the sole seller of a good or service. It then discusses the different types of monopolies such as geographic, government-granted, technological, and natural monopolies. The document goes on to explain how a profit-maximizing monopoly determines its optimal quantity and price using demand and marginal cost curves. It notes that a monopoly produces a lower quantity and charges a higher price than would be produced under perfect competition, resulting in deadweight loss. Finally, it discusses various public policy options for dealing with monopolies, such as antitrust laws to increase competition, regulation
This document contains instructions for a homework assignment about the Medici family during the Renaissance. Students are asked to answer 7 questions: 1) identifying if a source is primary or secondary, 2) discussing how the Medici family business helped Europeans, 3) considering why the Medici patronized artists, 4) listing 3 Medici contributions people enjoy today, 5) analyzing the Medici view on education, 6) evaluating the impact of powerful families, and 7) creating a timeline of 5 Medici family events. The document repeats the assignment questions multiple times.
This document provides an overview of Renaissance art and key concepts about the Renaissance period from the 1300s to 1550. It discusses causes of the Renaissance like the rediscovery of Greek/Roman ideas and art. Renaissance art is characterized by elements like perspective, realism, contrast between light and dark, and depicting humanism in Greek/Roman styles. The document lists and shows images of famous Renaissance artists like Michelangelo, Donatello, Da Vinci, and Raphael and some of their iconic works. Students are assigned a task analyzing Renaissance paintings or creating original art in the Renaissance style.
The document discusses the impact of the printing press invention by Johannes Gutenberg in the 1400s-1600s. It notes that before the printing press, all books were handwritten which was a long and difficult process. The printing press allowed books and new ideas to spread widely across Europe, helping to end ignorance. This was a factor in the Renaissance period, a time of "rebirth" in European culture and society. The document suggests Gutenberg is one of the most important people to ever live due to his role in popularizing printing.
The document contains examples and explanations of microeconomic concepts related to firm behavior including:
1. How a competitive firm determines its profit-maximizing quantity where marginal revenue equals marginal cost.
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5th Power Grid Model Meet-up
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Power Grid Model
The global energy transition is placing new and unprecedented demands on Distribution System Operators (DSOs). Alongside upgrades to grid capacity, processes such as digitization, capacity optimization, and congestion management are becoming vital for delivering reliable services.
Power Grid Model is an open source project from Linux Foundation Energy and provides a calculation engine that is increasingly essential for DSOs. It offers a standards-based foundation enabling real-time power systems analysis, simulations of electrical power grids, and sophisticated what-if analysis. In addition, it enables in-depth studies and analysis of the electrical power grid’s behavior and performance. This comprehensive model incorporates essential factors such as power generation capacity, electrical losses, voltage levels, power flows, and system stability.
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What to expect
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Webinar Recording: https://www.panagenda.com/webinars/hcl-notes-und-domino-lizenzkostenreduzierung-in-der-welt-von-dlau/
DLAU und die Lizenzen nach dem CCB- und CCX-Modell sind für viele in der HCL-Community seit letztem Jahr ein heißes Thema. Als Notes- oder Domino-Kunde haben Sie vielleicht mit unerwartet hohen Benutzerzahlen und Lizenzgebühren zu kämpfen. Sie fragen sich vielleicht, wie diese neue Art der Lizenzierung funktioniert und welchen Nutzen sie Ihnen bringt. Vor allem wollen Sie sicherlich Ihr Budget einhalten und Kosten sparen, wo immer möglich. Das verstehen wir und wir möchten Ihnen dabei helfen!
Wir erklären Ihnen, wie Sie häufige Konfigurationsprobleme lösen können, die dazu führen können, dass mehr Benutzer gezählt werden als nötig, und wie Sie überflüssige oder ungenutzte Konten identifizieren und entfernen können, um Geld zu sparen. Es gibt auch einige Ansätze, die zu unnötigen Ausgaben führen können, z. B. wenn ein Personendokument anstelle eines Mail-Ins für geteilte Mailboxen verwendet wird. Wir zeigen Ihnen solche Fälle und deren Lösungen. Und natürlich erklären wir Ihnen das neue Lizenzmodell.
Nehmen Sie an diesem Webinar teil, bei dem HCL-Ambassador Marc Thomas und Gastredner Franz Walder Ihnen diese neue Welt näherbringen. Es vermittelt Ihnen die Tools und das Know-how, um den Überblick zu bewahren. Sie werden in der Lage sein, Ihre Kosten durch eine optimierte Domino-Konfiguration zu reduzieren und auch in Zukunft gering zu halten.
Diese Themen werden behandelt
- Reduzierung der Lizenzkosten durch Auffinden und Beheben von Fehlkonfigurationen und überflüssigen Konten
- Wie funktionieren CCB- und CCX-Lizenzen wirklich?
- Verstehen des DLAU-Tools und wie man es am besten nutzt
- Tipps für häufige Problembereiche, wie z. B. Team-Postfächer, Funktions-/Testbenutzer usw.
- Praxisbeispiele und Best Practices zum sofortigen Umsetzen
HCL Notes und Domino Lizenzkostenreduzierung in der Welt von DLAU
Oligopoly game theory
1. Short Quiz
1. Draw a
correctly
labeled S/D
graph to the hot
sauce market,
include another
curve and label
it “MSC” –
marginal social
cost
2. Does this firm
have any
pricing power?
Explain
2. Verbal Bellringer
• Does your marginal grade %
bring up or down the
average for the class?
• Does your marginal
attendance bring up or down
the class attendence?
Grade %
Absences
Tardies
60
0
1
76
0
1
74
1
1
60
1
10
38
1
4
80
1
2
81
2
4
70
2
10
89
2
6
87
3
0
60
4
22
56
5
10
97
6
0
61
10
7
47
16
8
Average %
Ave AB Ave Tardies
69
3.60
5.73
5. Ultimatum game
• 2 players, you don’t know the other
• 20 pts (really $20, but I’m not that wealthy)
• 1 person proposes a split, the other accepts or
rejects, if rejected neither party gets points
6.
7. Ultimatum Results
• In industrialized cultures, people offer "fair"
(i.e., 50:50) splits, and offers of less than 20%
are often rejected
• Why?
11. Game Theory
• Game theory helps us understand oligopoly
and other situations where “players” interact
and behave strategically.
• Dominant strategy: a strategy that is best
for a player in a game regardless of the
strategies chosen by the other players
• Prisoners’ dilemma: a “game” between
two captured criminals that illustrates
why cooperation is difficult even when it is
mutually beneficial
12. Prisoners’ Dilemma Example
• The police have caught Bonnie and Clyde,
two suspected bank robbers, but only have enough
evidence to imprison each for 1 year.
• The police question each in separate rooms,
offer each the following deal:
– If you confess and implicate your partner,
you go free.
– If you do not confess but your partner implicates you,
you get 20 years in prison.
– If you both confess, each gets 8 years in prison.
15. Prisoners’ Dilemma Example
Confessing is the dominant strategy for both players.
Nash equilibrium:
Bonnie’s decision
both confess
Confess
Remain silent
Bonnie gets
Confess
Clyde’s
decision
Bonnie gets
8 years
20 years
Clyde
gets 8 years
Bonnie
goes free
Remain
silent Clyde
gets 20 years
15
Clyde
goes free
Bonnie gets
Clyde
gets 1 year
1 year
16. Prisoners’ Dilemma Example
• Outcome: Bonnie and Clyde both confess,
each gets 8 years in prison.
• Both would have been better off if both
remained silent.
• But even if Bonnie and Clyde had agreed
before being caught to remain silent, the
logic of self-interest takes over and leads
them to confess.
16
18. Oligopolies as a Prisoners’ Dilemma
• When oligopolies form a cartel in hopes
of reaching the monopoly outcome,
they become players in a prisoners’ dilemma.
• Our earlier example:
– AT & T and Verizon are duopolists in
Smalltown.
– The cartel outcome maximizes profits:
Each firm agrees to serve Q = 30 customers.
• Here is the “payoff matrix” for this example…
OLIGOPOLY
18
19. AT & T & Verizon in the Prisoners’ Dilemma
Each firm’s dominant strategy: renege on agreement,
produce Q = 40.
AT & T
Q = 30
Q = 40
AT & T
Q = 30
Verizon
Q = 40
AT & T
profit = $900
profit = $1000
Verizon’s
profit = $900
Verizon’s
profit = $750
AT & T
AT & T
profit = $750
profit = $800
Verizon’s
profit = $800
Verizon’s
profit = $1000
19
20. Opening Bell
On one side of your white “board”
write a large X and a large O on
the other side like this
X
O
21. Let’s play a game for points
If all X’s are played
3 Xs and 1 O played
2 X and 2 O’s played
1 X and 3 Os played
All O’s played
X
everyone loses 1 point
each x gets 1 point, O loses 1 point
each X gets 2 points, O loses 1 point
each x wins 3 points each O loses 1 point
everyone wins 1 point
O
22. Lack of Competition
• Oligopolies sometimes figure out
competition hurts their profits, so……….
24. If firms discuss and agreed on new
prices…
This is called collusion.
And you formed a cartel.
Collusion = setting of prices by rival firms
Cartel = groups of rival firms that try to fix prices
to increase profits
**Drug cartels – don’t compete on price
In the United States, it is illegal
25. Meanwhile….
• OPEC – Organization of Petroleum
Exporting Countries (1960-present)
26. How does OPEC indirectly set
prices?6 months, OPEC representatives
Every
and economists meet in Vienna to decide
production.
$/Barrel
S after meeting
100
S
Most Economists think
cartels don’t work in the
long term, why?
75
50
D
8 bi 10 billion
Q/barrels
28. ACTIVE LEARNING
3
The “fare wars” game
The players: American Airlines and United Airlines
The choice: cut fares by 50% or leave fares alone
– If both airlines cut fares,
each airline’s profit = $400 million
– If neither airline cuts fares,
each airline’s profit = $600 million
– If only one airline cuts its fares,
its profit = $800 million
the other airline’s profits = $200 million
Draw the payoff matrix, find the Nash equilibrium.
28
29. ACTIVE LEARNING
Answers
Nash equilibrium:
both firms cut fares
3
American Airlines
Cut fares
$400 million
Don’t cut fares
$200 million
Cut fares
United
Airlines
$400 million
$800 million
$800 million
$600 million
Don’t cut
fares
$200 million
$600 million
29
30. Prisoners’ Dilemma and Society’s Welfare
• The non cooperative oligopoly equilibrium
– Bad for oligopoly firms:
prevents them from achieving monopoly profits
– Good for society:
Q is closer to the socially efficient output
P is closer to MC
• In other prisoners’ dilemmas, the inability to
cooperate may reduce social welfare.
– e.g., arms race, overuse of common resources
OLIGOPOLY
31. Another Example: Negative Campaign Ads
• Election with two candidates, “R” and “D.”
• If R runs a negative ad attacking D,
3000 fewer people will vote for D:
1000 of these people vote for R, the rest
abstain.
• If D runs a negative ad attacking R,
R loses 3000 votes, D gains 1000, 2000
abstain.
• R and D agree to refrain from running attack
ads. Will each one stick to the agreement?
31
32. Another Example: Negative Campaign Ads
Each candidate’s
dominant strategy:
run attack ads.
R’s decision
Do not run attack
ads (cooperate)
Do not run
attack ads
(cooperate)
D’s decision
Run
attack ads
(defect)
no votes lost
or gained
no votes
lost or gained
Run attack ads
(defect)
R gains 1000
votes
D loses
3000 votes
R loses 3000
votes
D gains
1000 votes
R loses
2000 votes
D loses
2000 votes
33. Another Example: Negative Campaign Ads
• Nash eq’m: both candidates run attack
ads.
• Effects on election outcome: NONE.
Each side’s ads cancel out the effects of
the other side’s ads.
• Effects on society: NEGATIVE.
Lower voter turnout, higher apathy about
politics, less voter scrutiny of elected
officials’ actions.
34.
35. Mankiw Chapter 17 Assignment
• Problems #4 , 5, 6, 9
• QE #1
• John Nash
Greg Mankiw
36. Table 17-17. Consider a small town that has two grocery stores from which
residents can choose to buy a gallon of milk. The store owners each must
make a decision to set a high milk price or a low milk price. The payoff table,
showing profit per week, is provided here. The profit in each cell is shown as (Store 1,
Store 2).
1. Refer to Table 17-17. If grocery store 1 sets a high price, what price should grocery store 2
set? And what will grocery store 2's payoff equal?
a.
Low price, $800
b.
High price, $100
c.
Low price, $500
d.
High price, $650
e.
Low price, $650
3. What is the Nash Equilibrium in
this pricing problem?
2. Refer to Table 17-17. What is grocery store 1's dominant strategy?
a. Grocery store 1 does not have a dominant strategy.
b. Grocery store 1 should always set a low price.
c. Grocery store 1 should always set a high price.
d. Grocery store 1 should set a low price when grocery store 2 sets a low price, and grocery store
1 should set a high price when grocery store 2 sets a high price.
e. Grocery store 1 should set a low price when grocery store 2 sets a high price, and grocery
store 1 should set a high price when grocery store 2 sets a low price.
37. Game Theory problems
• Write a pay off matrix for the following
scenarios:
• A student deciding to help their partner do school work or not
• The Oakland Athletics owner deciding whether or not to
move the team if Oakland doesn’t build a new stadium
• Coke deciding whether or not to advertise
• A student deciding whether or not to study for an exam
• A quarterback deciding whether or not to pass or run the ball
• Verizon trying to decide whether or not to cut its fees vs
AT&T
• BK deciding whether or not to advertise on 12th Avenue
• American Airlines deciding whether or not to upgrade its
planes
Editor's Notes
“Players” can be people, firms, countries, or other entities. A “game” is a situation in which players interact. A “strategy” is a decision or decision-plan chosen by a player, which takes into account the behavior and likely reactions of other players.
SUGGESTION: Instead of showing this slide, ask for two volunteers to be your prisoners. You should pick two students that sit in different parts of the classroom, who are less likely to know each other. Tell them they will be playing bank robbers who have been caught. You are going to interrogate each one separately, like they do on police dramas (have any 20-year-olds heard of NYPD Blue?).
Ask Student #2 to step out of the room for a few moments. Offer to Student #1 the deal described on this slide. Make a note of his or her choice, but do not write it on the board.
Have Student #2 step into the room, and ask Student #1 to wait outside. Offer to Student #2 the deal described on this slide. Ask the class not to give any hints about the decision that Student #1 made. Make a note of Student #2’s choice.
Invite Student #1 back into the room. Write down both of their choices on the board and reveal to each of them their fate.
Hopefully, each student plays the “confess” strategy, so that the outcome of this role-play is the classic Prisoner’s Dilemma Nash Equilibrium. But even if the outcome is different, that’s okay. Ask each student to give the reasons for the strategy he or she chose. Explain why you would have expected both to play the “confess” strategy, and show the payoff matrix on the next slide.
I’m telling you, students LOVE this. It takes a little longer to get through the material, but the material has much more impact then merely lecturing on the Bonnie and Clyde example.
This slide is animated carefully as follows:
1) If Clyde confesses, then Bonnie gets 8 years if she confesses or 20 years if she does not.
2) If Clyde remains silent, Bonnie goes free if she confesses or gets 1 year if she does not.
At this point, it may be worth mentioning that Bonnie’s best move is to confess, regardless of Clyde’s decision – hence, “confess” is Bonnie’s dominant strategy.
3) If Bonnie confesses, Clyde gets 8 years if he confesses or 20 years if he does not.
4) If Bonnie remains silent, Clyde goes free if he confesses or gets 1 year if he does not.
Regardless of Bonnie’s decision, Clyde’s best move is to confess.
Both players have a dominant strategy of confessing.
The prisoners’ dilemma illustrates why cooperation is so difficult even when it is in both players’ mutual interest.
The term “payoff matrix” is fairly standard in microeconomics, so it may be worth mentioning to your students.
However, the textbook does not use this term, so you may wish to delete it from this presentation. If so, please note that the term appears in two different places in this presentation – once on this slide, and once on the bottom of the slide containing the instructions for Active Learning 3.
The title I have given this game (the “fare wars” game) might be too much of a hint about what happens in the Nash equilibrium. Feel free to change it to something like “airfare pricing strategies.”
In the arms race “game,” each of the superpowers would be better off if they could cooperate and sign an agreement to disarm. But the logic of self-interest dictates that each country will arm itself to the teeth. As a result, both countries are worse off for two reasons:
1) The risk of nuclear annihilation is higher.
2) Resources consumed in the arms race could have been used elsewhere.
The following slide presents another example in which the inability to cooperate reduces social welfare.
This slide and the two that follow work through an example that is especially topical during election years.
It does not appear in the textbook, so it is not supported with Test Bank questions or Study Guide questions. Please feel free to omit it from your presentation.
Yet, I encourage you to consider keeping this example. Students find it interesting: it explains why negative ads flood the airwaves prior to elections, and it explains the effects of these ads on society.
Understanding the payoffs:
Mutual cooperation is the benchmark outcome: Payoffs in other cells are differences in votes received relative to the mutual cooperation outcome. (This does not mean that there is a tie in the mutual cooperation outcome or the mutual defection outcome. It means that the winner will be decided by factors other than whether attack ads run or not.)
Consider R’s decision. R is better off defecting (running ads attacking D) whether D cooperates or defects. If D cooperates, R’s attack ads result in 1000 more votes for R and 3000 fewer votes for D. If D defects, R loses fewer votes if he runs the attack ad than if he cooperates. Hence, running attack ads is a dominant strategy for R.
The payoffs here are symmetric, so defecting is also D’s dominant strategy. This game has a Nash equilibrium in which both candidates defect. This is why, in the real world, we see so many attack ads in the weeks leading up to an election.
This slide considers the effects of the attack ads on election outcomes and on social well-being.
The negative impact on social well-being is like a negative externality: the “bystanders” are voters who are worse off as a result of the candidates’ actions.