Competitive Strategy

Take care of your competitors

Simultaneous Games

  • 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

  • Sequential games == Dynamic games (eg. games with a time aspect).
  • We draw game trees in that case.
    • First decision start the game
    • Then for each decision, the other player can take its own decision.
  • backward induction : simplification of sequential game.
  • eliminating options that do not maximize profit.