ECON 2010 Lecture Notes - Lecture 34: Strategic Dominance, Arms Race, Oligopoly

• School: CU-Boulder
• Department: Economics
• Course: ECON 2010
• Professor: Christian Hennigan

Document Summary

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. Why people sometimes cooperate: when the game is repeated many times, cooperation may be possible, two strategies may lead to cooperation: If your rival reneges in one round, you renege in all subsequent rounds. Tit-for-tat whatever your rival does in one round (whether renege or cooperate), you do in the following round. Stag game: two players: two hunters, the choice: track and kill a tag or a rabbit. If both go for the stag, then both hunters get a payoff of 3.