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Sequential game: A game is sequential if one player performs their actions after another player; otherwise, the game is a simultaneous move game. Perfect information : A game has perfect information if it is a sequential game and every player knows the strategies chosen by the players who preceded them.
The best way to look at this is to review an example of an economy that only produces two things - cars and oranges. If all the resources of the economy are put into producing only oranges, there will not be any factors of production available to produce cars. So the result is an output of X number of oranges but 0 cars.
Another use of game theory in managerial economics is in analyzing pricing strategies. For example, firms may use game theory to determine the optimal pricing strategy based on how they expect their competitors to respond to their pricing decisions. Overall, game theory serves as a useful tool for analyzing strategic interactions and decision ...
The Price of Anarchy (PoA) [1] is a concept in economics and game theory that measures how the efficiency of a system degrades due to selfish behavior of its agents. It is a general notion that can be extended to diverse systems and notions of efficiency.
Theory of Games and Economic Behavior, published in 1944 [1] by Princeton University Press, is a book by mathematician John von Neumann and economist Oskar Morgenstern which is considered the groundbreaking text that created the interdisciplinary research field of game theory.
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Cheap talk can, in general, be added to any game and has the potential to enhance the set of possible equilibrium outcomes. For example, one can add a round of cheap talk in the beginning of the Battle of the Sexes. Each player announces whether they intend to go to the football game, or the opera.
In a minimum-cost spanning-tree game, each player is a node in a complete graph. The graph contains an additional node s (the supply node). Each edge in the graph has a cost. The cost of each coalition S is the minimum cost of a spanning tree connecting all nodes in S to the supply node s. The value of S is minus the cost of S.