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Extensive form representation of a two proposal ultimatum game. Player 1 can offer a fair (F) or unfair (U) proposal; player 2 can accept (A) or reject (R). The ultimatum game is a popular experimental economics game in which two players interact to decide how to divide a sum of money, first described by Nobel laureate John Harsanyi in 1961. [1]
The Stackelberg model can be solved to find the subgame perfect Nash equilibrium or equilibria (SPNE), i.e. the strategy profile that serves best each player, given the strategies of the other player and that entails every player playing in a Nash equilibrium in every subgame.
Strategic excess capacity may be established to either reduce the viability of entry for potential firms. [5] Excess capacity take place when an incumbent firm threatens to entrants of the possibility to increase their production output and establish an excess of supply, and then reduce the price to a level where the competing cannot contend.
A limit order will not shift the market the way a market order might. The downsides to limit orders can be relatively modest: You may have to wait and wait for your price.
[13] A monopoly possesses a substantial amount of market power, however, it is not unlimited. A monopoly is a price maker, not a price taker, meaning that a monopoly has the power to set the market price. [14] The firm in monopoly is the market as it sets its price based on their circumstances of what best suits them.
Conditions on G (the stage game) – whether there are any technical conditions that should hold in the one-shot game in order for the theorem to work. Conditions on x (the target payoff vector of the repeated game) – whether the theorem works for any individually rational and feasible payoff vector, or only on a subset of these vectors.
Let us consider a case where there are too many firms in the market, causing a negative profit. A negative profit would mean that firms would start to leave the market. As firms leave, there is more profit per firm. This gradually increases to an amount of 0 profit per firm, where firms do not have incentive to leave the market or join the market.
Then, the game is not necessarily zero-sum - it is possible that both players will win. In fact, whenever Breaker has a winning strategy in the Maker-Breaker game, it is possible that two Breakers will both win in the Breaker-Breaker game. An application of this strategy is an efficient algorithm for coloring a hypergraph.