Game Theory Response: Leslie Thomas & Aaron Buelow

Watch LESLIE AND AARON videos and give your comments on these videos. 135 words per person

Leslie Thomas

Oligopoly is a market situation where a few large firms control the industry. For example, in the United States, Verizon, AT&T, Sprint, and T-mobile control the wireless cellphone industry. Competition between these firms keeps prices down. The Bathman video was very helpful in portraying the competitive scenario between firms in the industry. It gave a clear picture of how firms in an oligopoly serve as a sort of check on each other in pricing their products. Verizon, for example, cannot unilaterally increase the price of its products knowing it is in a hot competition with three other giants in the industry. The game theory highlights this situation very well. The game theory is applicable in situations at my place of work. All employees somehow are concerned about their individual growth on the job. They want to be recognized or gain promotions for their good performances. They must therefore work hard to impress on their supervisors. This is a classic example of the game theory. I find the game theory even easier in the explanation of an oligopoly. It even provides a clue into how these calculations are done. The game theory is a fun way of learning the concept of oligopoly and how firms that control an industry rely on each other to keep prices stable for consumers

Aaron Buelow

I liked the Batman video, and yes, it did help me to understand the concept of game theory. I don’t think it was at all silly, a matter of fact, I was captivated by Mr. Clifford’s approach. The video wasn’t silly. However, like many of the videos we have watched in the past few weeks, I thought his delivery was a little too fast.

I found the video below much easier to understand the concept of game theory. It starts out by identifying what a game is and then identifying different solution concepts. The speaker takes a similar approach to Mr. Clifford’s teaching style at a much slower, easier to understand pace. https://www(dot)youtube(dot)com/watch?v=3Y1WpytiHKE

Other oligopoly industries that come to mind is the U.S. airline industry. Today, the major airline carriers are limited to “Delta, American, Southwest, and United”; they have controlled the market for many years. I remember as a kid that there use to be many more airlines like “Braniff, Eastern, Western, America West, North West, TWA” etc., etc. As these other airlines went away, the three of the four major airlines (Delta, American & United) began to emerge and they raised their prices while tacking on additional fees (baggage) and reducing their onboard services such as meals, drinks, snacks and entertainment. Thankfully, in the last 10-20 years there have been several new (bargain) airlines that have come on to challenge these oligopolistic businesses.

I think the “game theory” matrices are easier to follow, like in the Batman movie. Not only because it’s entertaining and I can watch it multiple times, but also because it was interesting and I can conceptualize through the presence of the strong characters.

Aaron

Reference

Detective, T. (2013, February 05). Intro to Game Theory and the Dominant Strategy Equilibrium.