So what is Game Theory and how do businesses uses games? Here is some help from Dr C.
In the text, we consider a sequential-move game in which an entrant was considering entering an industry in competition with an incumbent firm (See Figure 15-1).
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Order Paper NowConsider now that the entrant, if fought, has the possibility of withdrawing from the industry (at a loss of 1 for the entrant and a gain of 8 for the incumbent), or staying at a loss of 5 for each player).
What is the equilibrium of this game? Discuss if the entrant is better off with or without the ability to withdraw.
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Game Theory-Sequential Games are Played in Business All the Time
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