ECE 468 Lecture Notes - Lecture 2: Nash Equilibrium, Unit
20 Jul 2020
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Simultaneous games of complete information unit 1. Unit2 we will be doing extensive/dynamic games of complete information. Ne strategy for each player so that no one has an incentive to deviate. Stay out of the market (a:1 b:5) If airbus decides to enter the market, boeing has the option to respond. Smash airbus try to completely destroy them (a:0 b:0) Accommodate accept they are part of the same industry (a:2 b:2) backward induction. The way that economists look at all games. So a choice between b:0 and b:2, choose b:2 = accommodate. A:2 (b/c they know boeing would choose to accommodate if they were to enter the market) choose a:2 = enter the market. Nash equilibrium: airbus enters the market, boeing accommodates. Alternative airbus: stays out; boeing: smashes (boeing would decide to smash if. Airbus were to enter the market, so airbus stays out) If airbus"s strategy is to stay out, then either choice is a best response for.
