12 Game Theory and Business Strategy
A camper awakens to the growl of a hungry bear and sees his friend putting on a pair of running shoes. “You can’t outrun a bear,” scoffs the camper. His friend coolly replies, “I don’t have to. I only have to outrun you!”
Learning Objectives
Use game theory to analyze oligopoly markets.
Identify the different types of Nash equilibria.
Describe the role of information and rationality in game theory.
Determine the outcome of a bargaining game.
Use game theory to bid optimally in auctions.
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