Simple Business Games

1. Simple Business Games Lectures in Microeconomics-Charles W. Upton

2. How much to Produce Dominant StrategyNash Equilibrium Simple Business Games

3. Do all Games Have Dominant Strategies? Automotive Firm 1 has great engineering skills. Firm 2 has good designers and does great styling. Simple Business Games

4. Do all Games Have Dominant Strategies? Firm 1 has a dominant strategy: technical change. Simple Business Games

5. Do all Games Have Dominant Strategies? Firm 2 does not have a dominant strategy. Simple Business Games

6. Do all Games Have Dominant Strategies? Firm 2’s choice is still obvious: assume #1 acts rationally. Adopt a technical change. Simple Business Games

7. Do all Games Have Dominant Strategies? The lesson: assume your opponent will act rationally. Simple Business Games

8. Early and Late Entry The new firm has a dominant strategy Simple Business Games

9. Early and Late Entry The existing firm does not have a dominant strategy but it can rely on the new firm’s strategy Simple Business Games

10. Early and Late Entry Moral of the story. Let the new guys try the gutsy strategies. Stodgy pays. Simple Business Games

11. Multiple Nash Equilibria This is the styling problem with a new payoff matrix. Simple Business Games

12. Multiple Nash Equilibria Now there are two Nash Equilibria Simple Business Games

13. Early and Late Entry New entrant can enter either new or wait. Established Firm can extend early or late. Simple Business Games

14. Multiple Nash Equilibria Look at the first Nash Equilibrium. Neither firm has reason to change Simple Business Games

15. Multiple Nash Equilibria Ditto for the second equilibrium Simple Business Games

16. Multiple Nash Equilibria This is an introduction. It shows how to get going. There is more to come. Simple Business Games

17. End ©2003 Charles W. Upton Simple Business Games