MBA 211 Game TheoryA Taxonomy of GamesSequential Moves with Complete InformationDescription: These are games where moves are observable by all parties and where the payoffs to each side are known to all. Examples: Firm entry followed by incumbent pricing decision, sequential capacity choice, rights of first refusal, chess, checkers, tic tac toeKey Tools: Game trees, look forward reason backSimultaneous Moves with Complete InformationDescription: These are games where moves are of players are made at the same time (or alternatively moves are made in secret). The payoffs to each side are known to all. Examples: Price competition, capacity competition, prisoner’s dilemma, hawk-dove, battle of the sexesKey Tools: Game tables, dominance, Nash equilibrium, mixed strategy Nash equilibriumMixed Moves with Complete InformationDescription: These are games where moves are of players are sometimes made at the same time (or alternatively moves are made in secret) and sometimes made sequentially. The payoffs to each side are known to all. Examples: Repeated prisoner’s dilemmas, entry followed by price competition, deep pockets gamesKey Tools: Subgame perfect equilibrium, credibility and commitmentSimultaneous Moves with Private InformationDescription: These are games where moves are of players are sometimes made at the same time (or alternatively moves are made in secret). Each side knows its own payoffs precisely but is uncertain about others payoffs. Examples: Auctions, negotiations with private outside options, new product introductions, venture capital financingKey Tools: Bayes’ rule, order statistics, Bayes-Nash EquilibriumSequential Moves with Private InformationDescription: These are games where moves are observable by all parties; however each side knows its own payoffs precisely but is uncertain about others payoffs. Examples: Signaling games, settlement offers in litigation, expert opinionsKey Tools: Bayes’ rule, Perfect Bayesian
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