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Презентация на тему Economics of pricing and decision making. (Seminar 1)

The guessing gameEach of you have to declare a number between 0 and 100. The winner is the person whose number is the closest to 2/3 of the average of all guesses. What is your guess?
Economics of pricing and decision making Seminar 1 The guessing gameEach of you have to declare a number between 0 ` The guessing game  DiscussionBounded rationalityPeople do not naturally use deep levels The guessing game  Importance of repetitionWhen the game is repeated, the Q1 Q1 Player 1:2q+4(1-q)=4q+3(1-q)Implies q=1/3Player 2:	2p+5(1-p)=3  implies p=2/3Q2 Monopoly:Perfect competition:	P=100-1/2Q=20, thus Q=160 and zero profit.Q3 Cournot:q1=q2=53.3P=46.6Π1=Π2=1422 Cournot with unequal costs:q1=66.6; q2=46.6P=44.1 Stackelberg:q1=80; q2=40P=40Π1=1600; Π2=800 Q4Table: Q5entrantincumbententrantentrant Mixed strategiesEntrant: -1p+1-p=2p,  p=1/4Incumbent: 7q+5(1-q)=6q+8(1-q),  q=3/4Entrant: π=0.5Incumbent: π =6.5 Q6Firm 1Firm 2Firm 2tvSales reps-1,71,62,50,8tvtvSales repsSales reps
Слайды презентации

Слайд 2 The guessing game
Each of you have to declare

The guessing gameEach of you have to declare a number between

a number between 0 and 100.

The winner is the

person whose number is the closest to 2/3 of the average of all guesses.

What is your guess?

Слайд 4 The guessing game Discussion
Bounded rationality
People do not naturally

The guessing game DiscussionBounded rationalityPeople do not naturally use deep levels

use deep levels of strategic thinking. They just think

2-3 steps ahead.
Players may be fully rational, however if a player believes that all other players will say a number N>0, that player will declare N*2/3>0.
If all players believe that the average guess will be high, this becomes a self-fulfilling prophecy.


Слайд 5 The guessing game Importance of repetition
When the game

The guessing game Importance of repetitionWhen the game is repeated, the

is repeated, the average guess eventually goes down to

0.

Слайд 6 Q1 V W X Y Z A 9,5 8,7 5,6 3,6 9,2 B 2,5 7,6 3,5 8,5 0,8 C 7,3 1,4 5,2 4,1 9,7 D 5,0 1,6 8,9 0,0 0,9 E 4,4 3,8 9,6 2,9 1,2

Q1  	V	W	X	Y	Z A	9,5	8,7	5,6	3,6	9,2 B	2,5	7,6	3,5	8,5	0,8 C	7,3	1,4	5,2	4,1	9,7 D	5,0	1,6	8,9	0,0	0,9 E	4,4	3,8	9,6	2,9	1,2

Слайд 7 Q1 V W X Y Z A 9,5 8,7 5,6 3,6 9,2 B 2,5 7,6 3,5 8,5 0,8 C 7,3 1,4 5,2 4,1 9,7 D 5,0 1,6 8,9 0,0 0,9 E 4,4 3,8 9,6 2,9 1,2

Q1  	V	W	X	Y	Z A	9,5	8,7	5,6	3,6	9,2 B	2,5	7,6	3,5	8,5	0,8 C	7,3	1,4	5,2	4,1	9,7 D	5,0	1,6	8,9	0,0	0,9 E	4,4	3,8	9,6	2,9	1,2

Слайд 8 Player 1:
2q+4(1-q)=4q+3(1-q)
Implies q=1/3
Player 2:
2p+5(1-p)=3 implies p=2/3
Q2

Player 1:2q+4(1-q)=4q+3(1-q)Implies q=1/3Player 2:	2p+5(1-p)=3 implies p=2/3Q2

Слайд 9 Monopoly:








Perfect competition:

P=100-1/2Q=20, thus Q=160 and zero profit.

Q3

Monopoly:Perfect competition:	P=100-1/2Q=20, thus Q=160 and zero profit.Q3

Слайд 10 Cournot:






q1=q2=53.3
P=46.6
Π1=Π2=1422

Cournot:q1=q2=53.3P=46.6Π1=Π2=1422

Слайд 11 Cournot with unequal costs:






q1=66.6; q2=46.6
P=44.1

Cournot with unequal costs:q1=66.6; q2=46.6P=44.1

Слайд 12 Stackelberg:






q1=80; q2=40
P=40
Π1=1600; Π2=800

Stackelberg:q1=80; q2=40P=40Π1=1600; Π2=800

Слайд 13 Q4
Table:

Q4Table:

Слайд 14 Q5
entrant
incumbent
entrant
entrant

Q5entrantincumbententrantentrant

Слайд 15 Mixed strategies





Entrant: -1p+1-p=2p, p=1/4
Incumbent: 7q+5(1-q)=6q+8(1-q), q=3/4
Entrant:

Mixed strategiesEntrant: -1p+1-p=2p, p=1/4Incumbent: 7q+5(1-q)=6q+8(1-q), q=3/4Entrant: π=0.5Incumbent: π =6.5

π=0.5
Incumbent: π =6.5


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