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