![]() P = c, where their profit is zero, is the only price without this profit deviation. By modestly lowering the price, anyone can steal all of their competitors' consumers, doubling their revenues (nearly). Despite the fact that this is the best outcome for them, they are motivated to deviate. ![]() Assume that when they both charge p = 10, their joint profit is maximized, resulting in a high profit for everyone. They compete by publicly posting pricing and have the same and constant marginal cost c (the wholesale price of gasoline). Single stage game or single shot game are names for non-repeated games.įor the real-life example of a repeated game, consider two gas stations that are adjacent to one another. Repeated games capture the idea that a player will have to take into account the impact of their current action on the future actions of other players this impact is sometimes called their reputation. ![]() ![]() The stage game is usually one of the well-studied 2-person games. In game theory, a repeated game is an extensive form game that consists of a number of repetitions of some base game (called a stage game). ![]()
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