Competitive Strategy

Source: https://www.coursera.org/learn/competitivestrategy/outline?module=WeFmF

From Université Louis-et-Maximilien de Munich (LMU), by Tobias Kretschmer

A strategy is a player's plan of actions in a “game”.

Important parts of a game are: players, actions, payoffs, and rules.

You can usually rely on the other players having a dominant strategy.

Dominated strategy: a strategy that never does better that a given other strategy (eg. the dominant one).

When we have a game matrix then the idea is to eliminate the dominated strategies.

Nash equilibrium = a combination of strategies such as no player can deviate unilaterally from his current strategy to improve his payoffs.

We can have a Nash Equilibrium without every player having a dominant strategy.

Prisoner's Dilemma : when nash equilibrium is not the best option the players could get if they were working together.

Sequential games == Dynamic games (eg. games with a time aspect).

backward induction : simplification of sequential game.

eliminating options that do not maximize profit.