Question

In the movie “A Beautiful Mind” there is a scene in which John Nash (Russell Crowe) and his friends are in a Pub and a group of girls walked into the place. At that point, Nash associated getting to meet the girls with game theory under oligopoly competition. If Nash and his friends are oligopolistic firms and the girls are consumers, use economic terms to translate the scene in terms of competition for an oligopoly market.

Answer 1

In the movie “A Beautiful Mind” there is a scene in which John Nash (Russell Crowe) and his friends are in a Pub and a group of girls walked into the place. At that point, Nash associated getting to meet the girls with game theory under oligopoly competition. If Nash and his friends are oligopolistic firms and the girls are consumers, use economic terms to translate the scene in terms of competition for an oligopoly market.
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Oligopoly is a market where a small number of firms are in competition.

In the scene John Nash (Russell Crowe) and his three friends are in a Pub and a beautiful blond woman walks in with four brunette friends. Dr Nash ssys that if they all go for the blond they block each other and not a single one of them will get her and her friends will give them a the cold shoulder because nobody likes to be second choice. But what if no one goes to the blonde they don’t get in each other’s way and don’t insult the other girls and everybody wins.

This solution is based on Cooperative game theory, where the firms (Nash and his friends) arrive at an enforceable or binding contract that permits them to adopt a strategy to maximise their joint profits or gains rather than compete with each other.

Cooperative game theory: Nash and his friends are firms 4 in number and the girls are consumers 5. If all the firms compete with each other for the blonde consumer by reducing their prices, they will end up reducing their profits or even make loses. But if instead of competing with each other for the same consumer, they cooperate wiith each other and adopt a joint price strategy to maximise their joint profits and go for the other 4 consumers (the brunettes), where each firm gets a consumer and they all gain/make profits. And no one goes for the Blonde consumer.