Question

4) Briefly outline why we can look at a Cournot oligopoly as a dilemma game, in game-theoretic terms.

Answer 1

The Cournot model spotlights on the creation yield choice of a solitary firm. A firm decides its rival's yield level and the lingering market request. It at that point decides its benefit - boosting yield for that leftover interest as though it were the whole market, and delivers as needs be.

Cournot truly created the idea of game theory when he took a gander at the instance of how organizations may act in a duopoly. There are two firms working in a restricted market. What this clarifies is an essential guideline. The two organizations are competing for greatest advantages. These advantages are gotten from both greatest deals volume (a bigger portion of the market) and more significant expenses (higher benefit). The issue originates from the way that expanding gainfulness through more significant expenses can harm income by losing piece of the overall industry. What Cournot's methodology does is amplify both piece of the overall industry and benefit by characterizing ideal costs. This cost will be the equivalent for the two organizations, as in any case the one with the lower cost will acquire some portion of the overall industry, which makes this a Nash balance.

It has been investigated that the procedures behind the choices made by operators, who need to contend, be it in adoration, war, business or nature. We separated such an unpredictable issue by isolating it into the various variables that can influence our dynamic, taking a gander at synchronous games with complete data, where we took a gander at Nash equilibrium and investigated games with a solitary balance or different equilibrium through two basic games: the prisoners dilemma and the clash of the sexes. We at that point proceed onward to nonstop systems, where we experienced Cournot's duopoly.