ECON 3M03 Lecture Notes - Lecture 7: Walmart, Correlated Equilibrium, Coordination Game
8 Feb 2015
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Gardner chapter 4 - part 3 of 3. Vhs and beta are two kinds of video systems. Once a firm adopts one of these technologies it cannot successfully network with a firm using the other technology. A firm can successfully network only with a firm using the same technology as it is using. This is a coordination game because the problem is to get everybody to coordinate on a single strategy. How many pure strategy ne are there: 1. In this game, we have symmetric pure strategy ne. Located opposite to each other on the payoff matrix. When this happens it usually indicates the existence of a mixed strategy ne. In a prob distribution with only two outcomes. Calculate the firms" payoffs in the mixed strategy ne. Low payoff values (compared to pure strategy ne) created by coordination problem. Half the time, the two firms are not on the same system.
