3 Micro (Fach) / 4. Oligopoly (Lektion)

Diese Lektion wurde von Janaw55 erstellt.

Lektion lernen

Diese Lektion ist leider nicht zum lernen freigegeben.

zurück  |  weiter 1 / 1

• 1.0 What is Game Theory? A method of studying strategic situations behaviour where outcomes depend not only on the players’ own actions but also on other players’ actions Game Theory helps us predict how players should play the game given their payoffs. It does not tell us what their payoffs should be. Examples: Entry Decision, Pricing Decision [ not relevant for Monopoly ] 
• 1.0 Elements of a Game -1 Strategies describe what players can do -2 Outcomes are what happens to different players once they play those strategies Outcomes depend not only on a player’s own strategy but also on the other player’s strategy -3 Payoffs are how different payers evaluate the outcomes Payoffs depend on what players care about [ solely own payoffs, reciprocity, ] Game Theory doesn’t tell us what a player’s payoff should be
• 1.0 What is the Prisoner’s Dilemma Game? One outcome is always better than another -> one strategy is strictly dominated by another  1 equilibrium that is best for everyone In a Prisoner’s Dilemma players choose what is in their own best interest and these choices do not even depend on how others behave. Despite this, the resulting outcome is inefficient because there is another outcome that would have been better for every single person. => Prisoner’s Dilemma game is a sharp illustration of the limitations of the invisible hand and the fact that self-interest does not always promote efficiency -> Rational choice can lead to bad outcomes for all players. -> Rational players should not play a strictly dominated strategy. 
• 1.0 Ways to get out of the Prioner’s Dilemma: Would the problem disappear if players understood the game better? Would it help if the players could talk to each other (but choose their strategies independently after the conversation)? => Talking does not help much Repetition (i.e. in a marriage can help) Contracts, implicit or non-implicit BUT: Players are not always selfish
• Case 1: 2 Selfish Players Dominated strategies l Prisoner’s Dilemma Strategy A is strictly dominated by strategy B if payoff from choosing A is strictly less than that from strategy B regardless of what others do Rational players do not play a strictly dominated strategy No matter what the other person does, one strategy is always better 
• Case 2: 1 Selfish player & 1 Indignant Angel Elimination of Dominated Strategies The selfish player has dominated strategy Angel knows that a rational player will never play a dominated strategy Angel as a rational player should understand this by putting herself in the other player’s shoes Angel will play the game as if all dominated strategies are removed from this game
• Case 3: Two indignant Angels 2 Equilibria l Neither player has a dominant strategy 2 Angels can easily end up in the best scenario, but also more easily in the worst scenario The outcome depends on their beliefs ->  If I believe the other player plays A I also want to play A -> If I believe the other player plays B I want to play B Now we have 2 equilibria depending on how players coordinate
• 1.0 What is a Nash Equilibrium? Each player plays a strategy that is the best response to what she believes the other players will play Players anticipate each others strategies and choose best responses Players can correctly anticipate the strategy choices of other players When multiple equilibria (i.e. investment game) players might not be able to coordinate on an efficient Nash Equilibrium. If players make an agreement on which strategies to play (agreement cannot be enforced by law) Such an agreement is credible only if it is a Nash equilibrium because it is self-enforcing Common cultural perceptions or historical traditions might focus players on certain strategies which become “self-prophecies” when they constitute a Nash Equilibrium Example: How to behave in traffic      
• 1.0 The indignant angel Does not have a dominant strategy Angel’s best response depends on what she believes the other players will do Puts themselves in other player's shoes Indignant: a showing of anger or annoyance at what is perceived as unfair treatment 
• 2 Models of Oligopoly Cournot Quantity Competition l Homogenous goods where production plans are made in advance Suppliers simultaneously choose Q they bring to market P decreases with industry's joint output -> OPEC, certain metals, chemicals, broadband, Airlines Bertrand Price Competition l Differentiated goods where production is easy to adjust Suppliers simultaneously choose prices Demand is decreasing in a supplier's own P, but increasing in the P of competitors -> FMCG, Cereal, Soft Drinks, Personal Care, Software, Tech, Apps, iPhone
• Key Differences Bertrand and Cournot Both quantity and price competition lead to a Prisoners dilemma like outcome. The key difference is that the nature of competition determines how your rival react to aggressive moves Bertrand Price Competition: Firms have strong incentives for branding: The more differentiation, the lower the closer the reaction functions, the higher the price: Firms are not worried about loosing their customers to their rival then products are more differentiated. They can sustain higher prices in equilibrium Aggressive moves only lead to lower P in price competition Reaction function is upward sloping Players end up in a Price war, aggressive Response  Cournot Quantity Competition: Firms have strong incentives to invest in lowering MC Aggressive moves  lead to higher Q, because rival accommodates Reaction function is downward sloping: Accommodating response

zurück  |  weiter 1 / 1