Chap.2 Normal –Form 博弈论英文版教学课件.pptVIP

Normal –Form Representation of Games Chap.2 Content 2.1 Basic Concepts 2.2 Normal –Form Representation of Games 2.1 Basic Concepts We will introduce some basic Concepts In our study by illustrating the following game---”Investment in New Product”. Investment in New Product The game of Investment in New Product concerns with two firms’ decisions whether to invest in a new product. The payoff of the game is described as follows. Investment in New Product Apparently, each firm’s payoff is not only decided by his decision and the market demand, but also the other firm’s decision. In game-theoretic analysis, we assume that the rule of game is common knowledge. This means that the firms payoff in “Investment in New Product” is common knowledge. But each firm still confront the following uncertainty: 1) whether he/she knows the market demand when he/she makes decision ? 2) whether he/she knows the other firm’s decision when he/she makes decision ? Given that each firm knows the market demand, Investment of New Product is a static game of complete information in which tow firms act simultaneously, or a dynamic game of complete information in which two firm act successively. Given that any firm dose not know the market demand, Investment of New Product is a static game of incomplete information in which tow firms act simultaneously, or a dynamic game of incomplete information in which two firm act successively. Player Players are individuals who make decision. Each player’s goal is to maximize his/her utility cost by choice of actions. In Investment of New Product , the two firms are specified the players of the game. Any player is denoted as i , and the set of players as In Investment of New Product , the set of players is Action An action or move by player i, denoted ai, is a choice he can make. In Investment of New Product , the f