COMM 296 - 5 Game Theory in Marketing

Vocabulary flashcards covering core concepts, game structures, and equilibrium types from the Game Theory in Marketing lecture.

Game Theory

A framework for understanding how individuals, groups, or companies make decisions when the final outcome for each participant depends directly on the choices made by others.

Nash Equilibrium

A state in a game where no player can improve their payoff by unilaterally deviating to a different strategy.

Prisoner's Dilemma

A game structure with $1$ Nash equilibrium where defection (betrayal) is the dominant strategy for both players, producing a mutually worse outcome than if both had cooperated.

Stag Hunt

A game structure with $2$ Nash equilibria centered on trust and coordination, where players must choose between a high-payoff cooperative option and a safe individual option.

Battle of the Sexes

A game structure with $2$ Nash equilibria where both players prefer coordinating on the same action over miscoordinating, but disagree on which coordinated outcome is best.

Hawk-Dove Game

A game structure with $2$ Nash equilibria involving conflict over who backs down, where a player wants to be aggressive only if the opponent yields, and mutual aggression causes severe loss.

Dominant Strategy

A strategy that yields the best outcome for a player regardless of the strategy chosen by the opposing player.

Mutual Stag Equilibrium

The optimal, high-payoff Nash equilibrium in a Stag Hunt game that is achieved only when players possess complete mutual confidence to coordinate.

Mutual Hare Equilibrium

The safer, low-risk Nash equilibrium in a Stag Hunt game that players fall back on when risk aversion or uncertainty about the other player's trust is present.

Hawk-Hawk Outcome

The worst outcome in a Hawk-Dove game where both players act aggressively, driving costs so high that total value is completely eliminated for both.

Dove-Dove Outcome

An outcome in a Hawk-Dove game where both players back down, avoiding costly escalation or bidding wars and preserving moderate payoffs.

Strategic Difference: Prisoner's Dilemma vs. Stag Hunt

In the Prisoner's Dilemma, cooperation is never a best response because defection is dominant; in the Stag Hunt, cooperation is a best response if a player expects the competitor to cooperate.

Strategic Difference: Stag Hunt vs. Battle of the Sexes

In a Stag Hunt, players share the same ranking of best outcomes (both prefer mutual Stag); in a Battle of the Sexes, players agree that coordinating is essential but prefer different coordinated outcomes.