Game Theory: Sequential Games are Played in Business All the Time

Preparation

The following video is about many of Cournot's contributions. Pay attention to the demonstration here of the Cournot Duopoly as a Nash equilibrium. The video nicely illustrates this complicated model with picturesno math! This is exactly the game we play in this week's discussion.

• CournotLinks to an external site..

Your instructor may also post additional resources to help further explain concepts related to this week's discussion.

Context

In our Managerial Economics textbook, we consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm (see Figure 15-1). There are several possibilities of how this sequential game will be played. We want to use the Froeb rule of "look ahead and reason back."

Post a Response

Use Figure 15-1 from the textbook as your starting point to address the following:

1. Play and analyze the game. Can, and how does, the entrant succeed? Is the incumbent ever in control of this game? What is the Nash equilibrium?
   • You may wish to review the old game known as Duopoly, as well as Antoine-Augustin Cournot, to help inform your post.

Respond to a Peer

To earn full credit, you must complete one post and one follow-up or reply to a classmate. Make sure both the post and the reply focus on the questions asked.

Format your work according to Strayer Writing Standards. The library is your home for SWS assistance, including citations and formatting. Please refer to the Library site for all support. Check with your professor for any additional instructions.