Give brief definitions of the following concepts: Game theory, cooperative equil

Question

Give brief definitions of the following concepts: Game theory, cooperative equilibrium, noneooperative equilibrium, dominant strategy, and Nash equilibrium, and price leadership. To do this, identify the definition for each term from the following list. 1 Actions taken by a firm to achieve a goal, such as maximizing profits. 2 The study of how people make decisions where attaining goals depends on interactions with others. 3 A table that shows the payoffs each firm earns from every combination of firm strategies. 4 An agreement among firms to charge the same price or otherwise not to compete. 5 A strategy that is the best for a firm, no matter what strategies other firms use. 6. A situation in which each firm chooses the best strategy given the strategies chosen by other firms. 7. A game outcome in which players seek to increase their mutual payoff. 8. A game outcome in which players pursue their own self-interest. 9. A situation in which no player can make himself better off by changing his decision at any decision node. 10. A situation where one firm announces a price change, which is matched by other firms in the industry. a. Game theory: b. Cooperative equilibrium: c. Noncooperative equilibrium: d. Dominant strategy: e. Nash equilibrium: f. Price leadership:

Explanation / Answer

Game theory - (2) The study of how people make decisions where attaining goals depend on interactions with others.

Cooperative Equilibrium - (7) A game outcome in which players seek to increase their mutual payoff.

Noncooperative Equilibrium - (8) A game outcome in which players pursue their own self-interest.

Dominant Strategy - (5) A strategy that is best for a firm, no matter what strategies other firms use.

Nash Equilibrium - (6) A situation in which each firm chooses the best strategy, given the startegies chosen by other firms.

Price leadership - (10)A situation where one firm announces a price change, which is matched by other firms in the industry.

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