14 Backward induction commitment, spies, and first-mover advantages分析和总结分析和总结.docxVIP

Game Theory: Lecture 14 Transcript Overview: We first apply our big idea--backward induction--to analyze quantity competition between firms when play is sequential, the Stackelberg model. We do this twice: first using intuition and then using calculus. We learn that this game has a first-mover advantage, and that it comes commitment and from information in the game rather than the timing per se. We notice that in some gameshaving more information can hurt you if other players know you will have that information and hence alter their behavior. Finally, we show that, contrary to myth, many games do not have first-mover advantages. October 24, 2007 back Professor Ben Polak: All right, so today I want to do something a little bit more mundane than we did on Monday. I want to go back and talk about quantity competition. So inthe first half of the course we talked about price competition. We talked about quantity competition. We talked about competition with differentiated products. I want to go back and revisit essentially the Cournot Model. So this was the Cournot Model: two firms are producing, are choosing their quantities simultaneously. Firm 1 is choosing Q1 and Firm 2 is choosing Q2. And all of this is just review so this is all stuff thats in your notes already. This is the demand curve. It tells us that prices depend on the total quantity being produced. So this is Q1 + Q2 and this is prices, then the demand curve is a straight line of slope b. Thats what this tells us. Heres our slop–e b. And we know that payoffs are just profits, which are price times quantity, revenues, minus cost times quantity, costs, were assuming constant marginal costs. We did this model out in full in maybe the third week of class and we figured out what the best response diagram looked like. And if you remember correctly, this was the best response for Firm 1 taking Firm 2s output as given, and this is the best response for Firm 2 taking Firm 1s output as given, and there were a few oth