Right. Equilibrium requires common knowledge of strategies---meaning that players can anticipate what others are doing even if they cannot observe them---and that the actors don't want to change their strategy given that expectation.
If k > v-c, then the consumer knows he would necessarily paying up more than v in case he decides to look for prices (since they could not be lower than c), and thus he would never do it. If he would never do it, p=v would be the equilibrium strategy - no profitable deviation in that case.
AHAHA! What I just wrote is correct, but it is indeed incomplete. In my defense, if k > v-c, p=v is the only equilibrium, whereas for k < v-c there is also an equilibrium at p=c. Still, it was an incomplete answer.
Bargains and ripoffs? More like “Beautiful videos that are top notch!” Thanks for creating another wonderful playlist. 👍
Thank you William. So the firms factor in how consumers expect they’d set prices too, so to speak.
Right. Equilibrium requires common knowledge of strategies---meaning that players can anticipate what others are doing even if they cannot observe them---and that the actors don't want to change their strategy given that expectation.
(Assuming symmetric strategy. )I think when k
If k > v-c, then the consumer knows he would necessarily paying up more than v in case he decides to look for prices (since they could not be lower than c), and thus he would never do it. If he would never do it, p=v would be the equilibrium strategy - no profitable deviation in that case.
AHAHA! What I just wrote is correct, but it is indeed incomplete.
In my defense, if k > v-c, p=v is the only equilibrium, whereas for k < v-c there is also an equilibrium at p=c.
Still, it was an incomplete answer.
@@jvgamaYour analysis for k>v-c case is totally true!
I think when k
@@haliluya4217 I think I was wrong in my analysis. I said that for 0