ECON1001 Chapter Notes - Chapter 3: Subgame, Extensive-Form Game, Nash Equilibrium
Document Summary
Strategic interactions between economic agents can be analysed using game theory. Note that this does not imply that each player knows what actions are actually taken by the other players. As you can see, the economic notion of a game is different but related to the everyday understanding of what a game is. In fact, the economic definition of a game would probably include most card- and board-games and sports, but also embraces a wider variety of situations. Example- annie and kat are working on a group project together, and their final mark depends upon how much effort they jointly put in. Let us say each person has the choice of putting in effort or not. Example- fran and maxwell are playing soccer, with maxwell as the goalkeeper. Fran can kick the ball into the left or the right side of the goal and, at the same time, maxwell can dive to the left or the right.
