ECON 1000 Chapter Notes - Chapter 14: Nash Equilibrium, Normal-Form Game, Oligopoly

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Steven Edwards

Document Summary

Game theory: a set of tools for studying strategic behaviour, behaviour that takes into account the expected behaviour of others and the recognition of mutual interdependence. If both confess to the crime each will receive 3 years for both crimes. If one confesses and other does not, he will receive 1 years and other will receive 10 year. Strategies: all the possible actions of each player: confess, deny. There are two players with two possibilities there are 4 outcomes: both confess, one confess, no one confess, other confesses. Payoff matrix: shows the payoffs for each player, actions. Nash equilibrium: player a takes the best possible action given the action of player b. Dominant strategy equilibrium: the best strategy of each player is to cheat regardless and player b takes the best possible action given the action of player a. of the strategy of other.