SITUATION: PRICE COMPETITION WITH DIFFERENTIATED PRODUCTS Our first example in this chapter was the case of shops selling the same goods. In that simple setting, consumers cared only about price, so if one store charged a lower price, they would all buy from it. In most markets, however, companies offer distinct products. You can buy […]
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SITUATION: COMPETING FOR ELECTED OFFICE Earlier this week, I watched the last of the presidential debates, and by the end of it I was ready to change the channel in disgust. Neither George Bush nor John Kerry seemed to be saying anything original, or anything that had- n’t been heard before. By the end of
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SITUATION: NEUTRALIZING PRICE COMPETITION WITH PRICE-MATCHING GUARANTEES Best Buy: “Store Price Guarantee—If you’re about to buy at a Best Buy store and discover a lower price than ours, let us know and we’ll match that price on the spot.”3 Circuit City: “Price Guarantee—If you’ve seen a lower advertised price from an- other local store with
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SITUATION: PRICE COMPETITION WITH IDENTICAL PRODUCTS Suppose you’re vacationing in Niagara Falls and figure that it’s time to pick up a few souvenirs for family and friends. You wander over to the string of sou- venir shops at Clifton Hill, all selling basically the same stuff: Niagara Falls pens (tilt it and the person in
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Solving for Nash Equilibria Without Calculus Solving for Nash Equilibria Without Calculus WITH AN INFINITE NUMBER of strategies, an exhaustive search for Nash equilibria will not work. Considering each strategy profile and asking whether it is a Nash equilibrium will take . . . well, forever! We need to be cleverer than that. Although there
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Stable Play: Nash Equilibria in Continuous Games 148 CHAPTER 6: STABLE PLAY: NASH EQUILIBRIA IN CONTINUOUS GAMES integers.* For example, is a rational number, as is 1.712, which is the same as the fraction An irrational number is a number that cannot be repre- sented by a fraction, which means that it has a decimal
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ENTRY GAME WITH IDENTICAL COMPANIES Number of Firms Gross Profit per Firm Net Profit per Firm 1 1,000 700 2 400 100 3 250 �50 4 150 �150 5 100 �200 7. There is a rough neighborhood with residents. Each resident has to decide whether to engage in the crime of theft. If an individual
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PUBLIC PROTESTS IN GDR, SEPTEMBER 1989– FEBRUARY 1990 Date Number of Events Turnout Average Turnout September 1989 7 16,500 3,300 October 1989 32 1,431,500 49,347 November 1989 28 3,268,900 136,204 December 1989 21 903,082 5,443 January 1990 26 1,782,567 81,026 February 1990 20 464,346 35,719 5.4 Selecting among Nash Equilibria MANY OF THE GAMES examined
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What about only radicals protesting? What about only radicals protesting? If all radicals protest, then there is a total of 100 protestors, so each radical’s payoff is That’s not good enough to make protesting optimal: there just aren’t enough rad- icals in society to sustain an equilibrium protest with only their participation. However, if both
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SITUATION: CIVIL UNREST How is it that a small group of people can oppress a large population? Having the support of the military is certainly important, as is having con- trol of the media and economic resources. But what is arguably most im- portant is coordination failure. In a nondemocratic society, the controlling faction is
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