Economics for Business II Day 12 – Some Macro Numbers and Answers Dr. Andrew L. H. Parkes “A Macroeconomic Understanding for use in Business” 卜安吉

January 5, 2012BECO II, Day 122 U.S.A. Real GDP Growth Rates 2011 is estimated around 2% 2012 is estimated at 2.4%

January 5, 2012BECO II, Day 123 Nash equilibrium In game theory, Nash equilibrium is a solution concept of a game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy unilaterally. In game theory, Nash equilibrium is a solution concept of a game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy unilaterally.

January 5, 2012BECO II, Day 124 Nash equilibrium If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium. If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute a Nash equilibrium.

January 5, 2012BECO II, Day 125 The Prisoners’ Dilemma  A Nash equilibrium, also known as a non- cooperative equilibrium, is the result when each player in a game chooses the action that maximizes his or her payoff given the actions of other players, ignoring the effects of his or her action on the payoffs received by those other players.

January 5, 2012BECO II, Day 126 The Prisoners’ Dilemma  An action is a dominant strategy when it is a player’s best action regardless of the action taken by the other player. Depending on the payoffs, a player may or may not have a dominant strategy.

January 5, 2012BECO II, Day 127 Explain Strategic Behavior That’s the question. That’s the question. Answer it. Answer it. If you needed help on the exam, I suggested you answer the three things: What is a game, dominant strategy, and payoff. If you needed help on the exam, I suggested you answer the three things: What is a game, dominant strategy, and payoff. Those three got you 4 points on the exam. Those three got you 4 points on the exam.

January 5, 2012BECO II, Day 128 Comparative Advantage Sources … make sure to explain, briefly! Sources … make sure to explain, briefly! 3 of them – give HO Theory … etc. 3 of them – give HO Theory … etc.

January 5, 2012BECO II, Day 129 Internalize the Externality Internalize the Externality Altering the Incentives Altering the Incentives