ECON1010 Lecture Notes - Lecture 8: Word Game, Oligopoly, Monetary Policy
Document Summary
Perfect competition : actions of 1 agent do not influence the others (price takers) Another class of situations where mutual interdependence of agents action. Agents will at strategically since they have to take into account what other agents will do. Oligopoly - market structure that features a small number of firms. Small no. of firms --> strategic interactions: the actions of 1 firm has direct effects on the other firms (and vice-versa) -> in making its own decision, a firm tries to anticipate what the other firms are about to do (game theory) Some economic applications of game theory: the study of, oligopolies, negotiations and auctions, externalities, military strategies and international relations, monetary policy. 2 player games: a game with just 2 players, simultaneously (e. g rock, paper, scissors, type of game in which players move simultaneously or, alternatively, they are unaware of the other player"s actions.
