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Samenvatting - Managerial Economics (D0T96A), 14/20 in eerste zit $16.04   Add to cart

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Samenvatting - Managerial Economics (D0T96A), 14/20 in eerste zit

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samenvatting managerial economics obv slides en lesnotities.

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  • August 6, 2024
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  • 2023/2024
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MANAGERIAL
ECONOMICS
D0T96a& D0T99a

Samenvatting 2024

,Lecture 1: Game theory and competition
What is managerial economics?
Managerial economics: Application of economic theory and methods to the study
of managerial problems:
1. Strategic behavior of firms in the marketplace
a. Industrial organization
b. Economics of innovation
2. Strategic relations within the boundary firm
a. Information economics
b. Bargaining (= onderhandelen)

Which methods?
 Fundamental economic principles (e.g. optimality, discounting)
 Game theory to analyze strategic interactions
 Abstract modeling
The problems of the manager
 Market analysis
 Marketing& sales marketing strategy
 Human resources and hiring decisions
 Planning R&D and IP strategy

Game theory: fundamentals
Game theory in managerial economics
Game theory: a mathematical tool used to represent interactions in a treatable
way
“games”: stylized representation of agents’ goals, information and capabilities
Game representation, strategies and payoffs
In a game:
- Preferences = a higher numerical value, called payoff, to outcomes that
are more preferred to them (voorkeuren hebben een hogere warden)
- Strategies: actions or sequences of actions that agents can choose to
achieve their goals
- Outcome: the result of all player’s strategies, and chance if the game
involves stochastic/ random elements
Game theory and individual rationality
In game theory we assume that agents are individually rational:
1. Have rational preferences:
a. Ability to rank the outcomes (favorite to least favorite)
b. Trasitive
2. Payoff-maximizing:
a. Players choose their strategies in order to achieve the highest payoff
for themselves (Doesn’t mean they’re selfish)

1

,Three main categories of games
Strategic Extsenive Sequential& bayesian




Strategic games
1. Static
a. One-shot game: 1 interaction
b. Simultaneous choice: players choose their strategy without
knowledge of the other players’ choice
2. Complete information
a. All players know the capabilities (strategies available) of every other
player.
b. All players know the consequences (payoffs) of every combination of
strategies.
Complete information ≠ certainty
Games often involve quantifiable risks => uncertainty
 However: sometimes players know something the other don’t =
asymmetric information
Strategic games allow for uncertainty, but not asymmetric information
A board taxonomy of games
Complete/ perfect information Asymmetric information
Static Strategic game Bayesian games
Dynamic Extensive games, repeated Sequential (Bayesian) games
games


Examples:
- Rock-paper-scissors: strategic
- Chess: extensive
- Sealed-bid auction: bayesian
- Poker: sequential
- Monopoly: extensive
- Starcraft II: sequential
Strategic games: abstract form
Strategic game:
1. Set of players


2

, For example: P= {player1, player2}
2. Set of actions available for each player
For example: Ap1= {defect, cooperate}, Ap2= {defect, cooperate}
Action  something you can do
Strategy  what you will do
In strategic game  action= strategy
3. Payoff functions:




o There’s also another way to represent this:

Strategic games: normal (payoff-matrix) form




Finding an equilibrium: elimination of dominated strategies
Start with P1 If P2 plays X/Y/Z what is the best/ worst option
 In every scenario H = worst option=> eliminate H




Observe P2 If P1 plays D/C what is the best/ worst option
 X is ALWAYS the best option => eliminate Y and T




 After elimination: P2 has only one choice => P1 decides=>
<D,X>
 <D,X> = equilibrium in dominant strategies



3

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