Modified Advertising Game Firm B Advertise Don't advertise Advertise 10,5 15,0 FirmA Don't advertise 6,8 20,2
10, 5 15, 0 6, 8 20, 2 Firm B Advertise Don’t advertise Firm A Advertise Don’t advertise Modified Advertising Game
13.3 The Nash Equilibrium Revisited Nash equilibrium-Set of strategies or actions in which each firm does the best it can given its competitors'actions. Each firm has no incentive to change its decision. Comparison of Nash equilibrium with an equilibrium in dominant strategies Equilibrium in I'm doing the best I can no matter what you do. Dominant Strategies You're doing the best you can no matter what I do. Nash equilibrium I'm doing the best I can given what you are doing. You're doing the best you can given what I am doing
13.3 The Nash Equilibrium Revisited Nash equilibrium - Set of strategies or actions in which each firm does the best it can given its competitors’ actions. Each firm has no incentive to change its decision. Comparison of Nash equilibrium with an equilibrium in dominant strategies Equilibrium in Dominant Strategies I’m doing the best I can no matter what you do. You’re doing the best you can no matter what I do. Nash equilibrium I’m doing the best I can given what you are doing. You’re doing the best you can given what I am doing
Product Choice Problem Firm 2 Crispy Sweet Crispy -5,-5 10,10 Firm 1 Sweet 10,10 -5,-5
-5, -5 10, 10 10, 10 -5, -5 Firm 2 Crispy Sweet Firm 1 Crispy Sweet Product Choice Problem
The Beach Location Game You (Y)and a competitor (C)plan to sell soft drinks on a beach. if sunbathers are spread evenly across the beach and will walk to the closest vendor,the two of you will locate next to each other at the center of the beach.This is the only Nash equilibrium
The Beach Location Game You (Y) and a competitor (C) plan to sell soft drinks on a beach. if sunbathers are spread evenly across the beach and will walk to the closest vendor, the two of you will locate next to each other at the center of the beach. This is the only Nash equilibrium
If your competitor located at point A,you would want to move until you were just to her left,where you could capture three-fourths of all sales. but your competitor would then want to move back to the center,and you would do the same
If your competitor located at point A, you would want to move until you were just to her left, where you could capture three-fourths of all sales. but your competitor would then want to move back to the center, and you would do the same