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Business Economics MICROECONOMICS

How the insights gained from the game theory help to understand the strategic behavior of oligopolists. Concept Introduction: Game theory is the study of behavior in situations where there is interdependency. It deals with the situation wherein the reward to anyone player depends not only on his or her own actions but also on that of other players.

How the insights gained from the game theory help to understand the strategic behavior of oligopolists. Concept Introduction: Game theory is the study of behavior in situations where there is interdependency. It deals with the situation wherein the reward to anyone player depends not only on his or her own actions but also on that of other players.

MICROECONOMICS

5th Edition

ISBN: 9781319395018

Author: KRUGMAN

Publisher: MAC HIGHER

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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 cWYWL

To determine

How the insights gained from the game theory help to understand the strategic behavior of oligopolists.

Concept Introduction:

Game theory is the study of behavior in situations where there is interdependency. It deals with the situation wherein the reward to anyone player depends not only on his or her own actions but also on that of other players.

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Chapter 14, Problem bWYWL

Chapter 14, Problem dWYWL

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