Open Yale Courses

ECON 159: Game Theory

Lecture 7 - Nash equilibrium: shopping, standing and voting on a line << previous session | next session >>

Overview:

We first consider the alternative "Bertrand" model of imperfect competition between two firms in which the firms set prices rather than setting quantities. Then we consider a richer model in which firms still set prices but in which the goods they produce are not identical. We model the firms as stores that are on either end of a long road or line. Customers live along this line. Then we return to models of strategic politics in which it is voters that are spread along a line. This time, however, we do not allow candidates to choose positions: they can only choose whether or not to enter the election. We play this "candidate-voter game" in the class, and we start to analyze both as a lesson about the notion of equilibrium and a lesson about politics.

Reading assignment:

Strategies and Games: Theory And Practice. (Dutta): Chapters 6-7

Strategy: An Introduction to Game Theory. (Watson): Chapter 10

Thinking Strategically. (Dixit and Nalebuff): Chapter 9, Section 5

Class lecture:

Transcript
html
Audio
mp3
Video
medium bandwidth
low bandwidth
high bandwidth

Resources:

Problem Set 3 [PDF]

Discussion of Linear-City Homework [PDF]

Blackboard Notes Lecture 7 [PDF]

Yale University 2008.  Some rights reserved. Unless otherwise indicated on this page or on the Open Yale Courses website, all content on this page is licensed under a Creative Commons License (Attribution-NonCommercial-ShareAlike 3.0)