Game Theory and Competition
London, England
29 March 2012
Hosted By: NERA Economic Consulting
Competition involves the strategic interaction of competitor firms. But the analysis of strategy is complicated because the optimal strategy of each player typically depends on what the other player does, and vice versa. This Gordian knot of interdependence is "solved" by game theory, the branch of economics pioneered by von Neumann and Nash, and which lies at the heart of modern oligopoly and competition theory.
Drawing on a variety of intuitive models, this seminar provided an accessible and non-technical introduction to game theory, exploring both its predictions and its limitations. The seminar provided insights into a range of key concepts in competition, including oligopoly, tacit collusion, predation, entry deterrence, and dominance, and explained how to bargain, how to make threats credible, and whether it is possible to outwit the goalkeeper when taking a penalty kick.
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