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Game Theory: Inside Oligopoly


Headline: Airline Seeks Government Regulation of Carry-on Baggage

I.

Introduction

II.

Overview of Games and Strategic Thinking

III.

Simultaneous-Move, One-Shot Games

A.

Theory

B.

Applications of One-Shot Games

1.

Pricing Decisions

2.

Advertising and Quality Decisions

3.

Coordination Decisions

4.

Monitoring Employees

5.

Nash Bargaining

IV.

Infinitely Repeated Games

A.

Theory

1.

Review of Present Value

2.

Supporting Collusion with Trigger Strategies

B.

Factors Affecting Collusion in Pricing Games

1.

Number of Firms

2.

Firm Size

3.

History of the Market

4.

Punishment Mechanisms

C.

An Application of Infinitely Repeated Games to Product Quality

V.

Finitely Repeated Games

A.

Games with an Uncertain Final Period

B.

Repeated Games with a Known Final Period: The End-of-Period Problem

C.

Applications of the End-of-Period Problem

1.

Resignations and Quits

2.

The "Snake-Oil" Salesman

VI.

Multistage Games

A.

Theory

B.

Applications of Multistage Games

1.

The Entry Game

2.

Innovation

3.

Sequential Bargaining

VII.

Answering the Headline

VIII.

Summary

IX.

Key Terms and Concepts

X.

Conceptual and Computational Questions

XI.

Problems and Applications

XII.

Case-Based Exercises

XIII.

Selected Readings











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