Game Theory-Sequential Games are Played in Business All the Time.
So what is Game Theory and how do businesses uses games?
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). There are several possibilities of how this sequential game will be played. We want to use the Froeb rule of look ahead and reason back. Can and how does the entrant succeed? Is the incumbent ever in control of this game? Hint, the game is the Duopoly game explained in the video on this week’s page.