What This Document Is
This is a problem set designed for an upper-level undergraduate course in Games and Economics at the University of Southern California (ECON 404). It focuses on applying game theory principles to analyze strategic interactions in various market scenarios. The problems require students to demonstrate their understanding of concepts like sequential move games, Cournot competition, entry deterrence, and backward induction. It’s a practical exercise meant to solidify theoretical knowledge through rigorous problem-solving.
Why This Document Matters
This problem set is crucial for students enrolled in ECON 404 seeking to master the application of game theory to economic models. It’s particularly beneficial for those preparing for exams or aiming to deepen their understanding of strategic decision-making in imperfectly competitive markets. Working through these problems will enhance your ability to model real-world business situations and predict outcomes based on rational player behavior. It’s best utilized *after* a thorough review of related course lectures and readings.
Common Limitations or Challenges
This problem set does not provide a comprehensive review of the underlying game theory concepts. It assumes you already have a foundational understanding of topics like Nash equilibrium, subgame perfect equilibrium, and Cournot models. It also doesn’t offer step-by-step solutions; the intention is for you to independently apply the learned techniques. The problems require a strong analytical skillset and the ability to translate economic scenarios into formal game-theoretic representations.
What This Document Provides
* Multiple scenarios involving strategic interactions between firms.
* Problems centered around market entry and competition.
* Applications of Cournot oligopoly models.
* Exercises requiring the use of backward induction to solve sequential games.
* Problems involving cost structures and their impact on firm behavior.
* A scenario involving spatial competition (location games).
* Opportunities to analyze the impact of fixed costs on market outcomes.