ECON 201 1st Edition Lecture 23 Outline of Last Lecture I II III IV V VI VII Introduction Determining Market Structure Determining Industry Structure Monopolistic Competition Output Price and Profit of a Monopolistic Competitor Strategic Pricing and Oligopoly Game Theory and Strategic Decision Making Outline of Current Lecture I Payoff Matrix II Nash Equilibrium III Dominant Strategy IV Behavioral Economics V Endowment and framing effects Current Lecture I Payoff Matrix a A payoff matrix provides a summary of each player s strategies and how the outcomes of their choices depend on the actions of other players II Nash Equilibrium a An equilibrium of a game that results from a non cooperative game when each player plays his or her best strategy III Dominant Strategy a A dominant strategy is preferred regardless of one s opponent s move b A mixed strategy is choosing randomly IV Behavioral Economics These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute a It examines deviations between formal game theoretical predictions and actual outcomes of games V Endowment and framing effects a Examples of finding in behavioral economics that challenge the traditional model s predictions b The traditional model remains relevant because it only takes a few people to realize that money has been left on the table for the results of the standard model to hold
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