Game Theory

• Pure Strategy Nash Equilibria - the set of strategies that lead all players to best respond to each other
• Mixed Strategy Nash Equilibria - the set of probabilities associated with strategies that make players indifferent among their strategies
• Subgame Perfect Nash Equilibria - a set of strategies found by backward induction such that there is an NE at every sub game
• Bertrand competition - firms choose the price they want to set
• Cournot competition - firms choose the quantity to produce
• Stackelberg competition - firms sequentially choose the quantity to produce and there is a first mover advantage
• A dominant strategy is one that is always a best response, it doesn't depend on what the other player does
• SPNE Notation = {P1 Strategy, P2 Best Responses to any strategy of P1}