Beach Location Game Ocean C 0 B Beach 200 yards Where will the competitors locate (i.e. where is the Nash equilibrium)? Chapter 13 Slide 26
Chapter 13 Slide 26 Beach Location Game Where will the competitors locate (i.e. where is the Nash equilibrium)? Ocean 0 B Beach A 200 yards C
Beach Location Game Ocean C 0 B Beach 200 yards 2)EXamples of this decision problem include: o Locating a gas station ● Presidential elections Chapter 13 Slide 27
Chapter 13 Slide 27 Beach Location Game 2) Examples of this decision problem include: ⚫ Locating a gas station ⚫ Presidential elections Ocean 0 B Beach A 200 yards C
The Nash Equilibrium Revisited ■ Maximin Strategies ● Scenario Two firms compete selling file-encryption software They both use the same encryption standard(files encrypted by one software can be read by the other advantage to consumers) Chapter 13 Slide 28
Chapter 13 Slide 28 The Nash Equilibrium Revisited ◼ Maximin Strategies ⚫ Scenario ◆Two firms compete selling file-encryption software ◆They both use the same encryption standard (files encrypted by one software can be read by the other - advantage to consumers)
The Nash Equilibrium Revisited ■ Maximin Strategies ● Scenario Firm 1 has a much larger market share than Firm 2 Both are considering investing in a new encryption standard Chapter 13 Slide 29
Chapter 13 Slide 29 The Nash Equilibrium Revisited ◼ Maximin Strategies ⚫ Scenario ◆Firm 1 has a much larger market share than Firm 2 ◆Both are considering investing in a new encryption standard
Maximin Strategy Firm 2 Don't invest Invest Don't invest 0,0 10,10 Firm 1 Invest 100,0 20,10 Chapter 13 Slide 30
Chapter 13 Slide 30 Maximin Strategy Firm 1 Don’t invest Invest Firm 2 0, 0 -10, 10 -100, 0 20, 10 Don’t invest Invest