Major Concepts I

• Sequential Games (1.3)
  • game trees
  • strategy
  • rollback equilibrium
  • order advantages
• Simultaneous Games (1.4)
  • Nash equilibrium (detection):
    • Successive elimination of dominated strategies
    • Best response
  • Nash equilibrium refinements (1.5):
    • Focal points
    • Pareto efficiency
    • Payoff dominance
    • Risk dominance
    • Rationalizability

Major Concepts II

• Types of Games:
  • Constant sum game
  • Prisoners' dilemma
  • Coordination games (1.5):
    • (Pure) Coordination
    • Assurance (Stag Hunt)
    • Battle of the Sexes
    • Chicken (Hawk-Dove)

Major Concepts III

• Economics of oligopoly (2.1-2.4)
  • Oligopoly as prisoners' dilemma
  • Cartels
    • problems and mechanisms to overcome
  • Bertrand competition
  • Cournot competition (& collusion)
  • Stackelberg competition
  • Contestable markets (2.5)
• Mixed strategies (3.1)
  • Opponent indifference principle

Don't Worry About

• Harder questions on HWs/in class (meant to challenge you in low-stakes environment):
  • Simultaneous games with >2 players
  • Cournot competition with >2 firms
  • Mixed strategies for >2 strategies (e.g. Rock-Paper-Scissors)

Question 1

• Name several different refinements of Nash equilibrium.

Question 2

• Explain the differences between the three different models of oligopoly.

• Which is most/least profitable to each firm?

Question 3

• What is the Nash equilibrium of a contestable market? What conditions are required for a market to be contestable?

Question 4

• Name the four types of coordination games and describe the major features of each.

Question 5

• Explain the differences between a prisoners' dilemma and a stag hunt.

You can draw example payoff tables, and let each player choose between "Cooperate" and "Defect" for each game.

Question 6

Question 7

• Two firms are competing simultaneously over quantity, have constant marginal costs of \$0, and share the market demand

p=12−QQ=q1+q2

• Find the Cournot-Nash equilibrium profit for each firm.

Question 8