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Business Economics Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)

Why do economists refer to the methodology for analyzing oligopolies as game theory .

Why do economists refer to the methodology for analyzing oligopolies as game theory .

Solution Summary: The author explains why economists refer to the game theory as a methodology for analyzing the oligopoly market.

Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)

Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)

7th Edition

ISBN: 9780134833392

Author: R. Glenn Hubbard, Anthony Patrick O'Brien

Publisher: PEARSON

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Question

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

Chapter 14, Problem 14.2.2RQ

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Why do economists refer to the methodology for analyzing oligopolies as game theory.

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Chapter 14, Problem 14.2.1RQ

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Students have asked these similar questions

What is the prisoners dilemma, and what does it have to do with oligopoly?

What is the link between game theory and market structures? Which market structure is game theory more linked to?

Chapter 14 Solutions

Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)

Ch. 14 - Prob. 14.1.1RQ Ch. 14 - Prob. 14.1.2RQ Ch. 14 - Prob. 14.1.3RQ Ch. 14 - Prob. 14.1.4PA Ch. 14 - Prob. 14.1.5PA Ch. 14 - Prob. 14.1.6PA Ch. 14 - Prob. 14.1.7PA Ch. 14 - Prob. 14.1.8PA Ch. 14 - Prob. 14.1.9PA Ch. 14 - Prob. 14.1.10PA

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