COMM 295 Final Study

Oligopoly

Market with just a few firms, barrier to entry

Cartels

Firms collectively set monopoly quantity and price, can be unstable due to external and internal forces

Cournot Oligopoly

Choose quantity simultaneously, prices higher than perfect competition lower than monopoly, more firms implies outcome approaches competitive industry

Bertrand Oligopoly

Choose price simultaneously, with identical products p = MC, with different products p > MC (positive markups)

Gambler’s Fallacy (the law of maturing averages)

The belief that independent random events must ‘balance out’ in the short run. ex. After 5 coin flips land heads, people feel tails is ‘owed’ but the 6th flip is still 50/50

Overconfidence

Overestimating your own abilities, knowledge, or the probability that good outcomes happen to you

Certainty Effects

People overweight outcomes that are certain relative to ones that are merely very likely. ex. the jump from 99% to 100% feels far bigger than from 98% to 99%