ECON 1000 Chapter Notes - Chapter 15: Nash Equilibrium, Oligopoly, Trigger Strategy

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: John Paschakis

Document Summary

Oligopoly games: all games share four common features: rules strategies. Gives a good idea of how game theory works and generates predictions. Describes a case where rivalry of the participants leads to the worst solution from their point of view. Each prisoner would be better off if both prisoners deny. Both bob and joe would be better off not confessing if they both do not confess. The demand strategy equilibrium is that both prisoners confess. a nash equilibrium occurs when both bob and joe confess. If bob confesses, joe would be better off confessing. The best strategy of each player is to confess. A strategy in which a player cooperates in the current period if the other player cooperated in the previous period, but the player cheats in the current period if the other player cheated in the previous player. Sarah"s soothing diapers, inc. and orville"s odorless diapers, inc. are duopolists, who have agreed to collude.