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This game has been studied less intensively than the other standards of experimental economics, but appears to produce the interesting result that proposers typically take the "least fair" option, keeping most of the reward for themselves, a conclusion sharply in contrast to that implied by the ultimatum or dictator games. [a]
Another use of game theory in managerial economics is in analyzing pricing strategies. For example, firms may use game theory to determine the optimal pricing strategy based on how they expect their competitors to respond to their pricing decisions. Overall, game theory serves as a useful tool for analyzing strategic interactions and decision ...
In game theory and economics, a mechanism is called incentive-compatible (IC) [1]: 415 if every participant can achieve their own best outcome by reporting their true preferences. [ 1 ] : 225 [ 2 ] For example, there is incentive compatibility if high-risk clients are better off in identifying themselves as high-risk to insurance firms , who ...
Major topics include measurement of economic performance, national income and price determination, fiscal and monetary policy, and international economics and growth. AP Macroeconomics is frequently taught in conjunction with (and, in some cases, in the same year as) AP Microeconomics as part of a comprehensive AP Economics curriculum, although ...
Transferable utility is a concept in cooperative game theory and in economics. Utility is transferable if one player can losslessly transfer part of its utility to another player. Such transfers are possible if the players have a common currency that is valued equally by all.
The Shapley value is a solution concept in cooperative game theory. It was named in honor of Lloyd Shapley, who introduced it in 1951 and won the Nobel Memorial Prize in Economic Sciences for it in 2012. [1] [2] To each cooperative game it assigns a unique distribution (among the players) of a total surplus generated by the coalition of all ...
The free money game is an example of a "special" game with an even number of equilibria. In it, two players have to both vote "yes" rather than "no" to get a reward and the votes are simultaneous. There are two pure-strategy Nash equilibria, (yes, yes) and (no, no), and no mixed strategy equilibria, because the strategy "yes" weakly dominates "no".
Morgenstern Oskar (1976). "The Collaboration Between Oskar Morgenstern and John von Neumann on the Theory of Games". Journal of Economic Literature. 14 (3): 805– 816. JSTOR 2722628. Commemorative edition of the book Theory of Games and Economic Behavior; Copeland A. H. (1945). "Review of 'The Theory of Games and Economic Behavior".