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1、Chapter10GamesandStrategicBehaviorLearningObjectivesDescribethebasicelementsofagameDefineandfindanequilibriumforagameRecognizeandshowtheeffectsofdominantstrategies.DefineandexplainthePrisoner'sDilemmaandhowitappliestoreal-worldsituationsShowhowgamesinwhichtimingmatter
2、sdifferfromgamesinwhichitdoesnot.DiscusscommitmentproblemsandexplainhowalteringpreferencescansolvecommitmentproblemsStrategiesandPayoffsActionshavepayoffsthatdependonTheactionsWhentheyaretakenTheactionsofothersSomemarketsarecharacterizedbyinterdependenceApplytomonopol
3、isticcompetitionandoligopolyGameTheoryBasicelementsofagameTheplayersTheiravailablestrategies,actions,ordecisionsThepayofftoeachplayerforeachpossibleactionAdominantstrategyisonethatyieldsahigherpayoffnomatterwhattheotherplayerdoesDominatedstrategyisanyotherstrategyavai
4、labletoaplayerwhohasadominantstrategyAmericanandUnited–Scenario1Players:UnitedandAmericanAirlinessupplyingservicebetweenChicagoandSt.LouisNoothercarriersStrategies:Increaseadvertisingby$1,000ornotAssumptionAllpayoffsareknowntoallpartiesPayoffMatrixPayoffissymmetricDom
5、inantstrategyisraiseadvertisingspendingBothcompaniesareworseoffAmericanAirlinesOptionsUnitedAirlinesOptionsRaiseSpendingNoRaiseRaiseSpendingUnited:$5,500American:$5,500United$8,000American$2,000NoRaiseUnited:$2,000American:$8,000United:$6,000American:$6,000Equilibrium
6、inaGameNashequilibriumisanycombinationofstrategiesinwhicheachplayer’sstrategyisherorhisbestchoice,giventheotherplayer’sstrategiesEquilibriumoccurswheneachplayerfollowshisdominantstrategy,ifitexistsEquilibriumdoesnotrequireadominantstrategyAmericanandUnited–Scenario2Sa
7、mesituationDifferentpayoffs;non-symmetricAmericaraisesspendingUnitedanticipatesAmericanaction;doesnotraiseAmericanAirlinesOptionsUnitedAirlinesOptionsRaiseSpendingNoRaiseRaiseSpendingUnited:$3,000American:$4,000United$8,000American$3,000NoRaiseUnited:$4,000American:$5
8、,000United:$5,000American:$2,000Prisoner'sDilemmaTheprisoner'sdilemmahasadominantstrategyTheresultingpayoffsaresmallerthanif
