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Class Worksheet 13-Ch13

The document is a class worksheet for BTM210 Microeconomics, focusing on game theory concepts including cooperative vs. noncooperative games, Nash equilibrium, and strategies like maximin and tit-for-tat. It also covers topics related to threats, commitment, credibility, and oligopoly models. Key examples and cases from the textbook are referenced to illustrate these concepts.

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2 views

Class Worksheet 13-Ch13

The document is a class worksheet for BTM210 Microeconomics, focusing on game theory concepts including cooperative vs. noncooperative games, Nash equilibrium, and strategies like maximin and tit-for-tat. It also covers topics related to threats, commitment, credibility, and oligopoly models. Key examples and cases from the textbook are referenced to illustrate these concepts.

Uploaded by

95g5n77d84
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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BTM210 Microeconomics Youngsun Kwon

Class Worksheet: Chapter 13


(Dec 10 and 12, 2024)

1. Basic concepts of game theory


A. Cooperative game vs. noncooperative game: how are the two different?
B. Meaning of rationality? Is it important to know who your opponent is? Why?
C. What is a dominant strategy? Finding an equilibrium in dominant strategies. What if
one player does not have a dominant strategy? Use textbook cases on page 505.

2. Nash equilibrium
A. The concept?
B. Coordination game: Table 13.3 case. What will be the equilibrium?
C. Beach location game: Hotelling’s linear city model.
D. Maximin strategy: What is this, and how is it different from NE? Use Table 13.4.
Why does someone have the incentive to use the maximin strategy?
E. What if Firm 1 knows the probability distribution of choices that will be made by
Firm 2?
F. Prisoner’s dilemma
G. Mixed strategy: concept? In the Rock-Paper-Scissor game, what are the strategies,
and what is the equilibrium?
BTM210 Microeconomics Youngsun Kwon

3. Repeated games and sequential games


A. Solving the prisoner’s dilemma game. How? The tit-for-tat strategy.
B. What are a few key conditions for successfully using a tit-for-tat strategy?
C. Game tree and solving the game: Table 13.9.
D. First mover advantage?

4. Threats, commitment, and credibility


A. An example of a threat?
B. What is the empty threat?
C. Making threats credible? How? Commitment!
D. The role of reputation.

5. Oligopoly: Ch 12.2 (I may not cover this topic in this semester)


A. Finding equilibrium of the Cournot model
B. Best response curves or reaction curves.
C. Equilibrium with linear demand curve: monopoly, oligopoly, competitive equilibrium

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