Game Theory and Oligopoly: Crash Course Economics #26 

Main Notes: 1- 4 types of markets A- Perfect competition Low barriers, identical products, no control over price (eg strawberries) B- Monopoly There is one large company that produces a product with few substitutes. And because high barriers prevent competition, a monopoly has a lot of control over price. C- Monopolistic competition a market with many producers and relatively low barriers; their products are very similar but not identical. (eg furniture stores or fast food) D- Oligopolies markets that have high barriers to entry and are controlled by a few large companies. Similar to monopolistic competition, their products are similar but not identical. That gives them some control over their prices. How? 2- Non-price competition: Companies focus on things like style, quality, location, or service. The goal is to distinguish their product from their competitors. The most recognizable form of non-price competition is advertising. 3- Game theory: the study of strategic decision making. 4- Collusion: If businesses don’t compete at all and they agree to charge the same high price, conspiring to form what economists call a cartel. They split the customers 50/50, but now they make even more profit -- benefiting at the expense of consumers. It’s illegal in the US. 5- Price leadership is when one company changes its prices, and its competitors have to decide if they’re going to follow suit. 6- Pay off matrix: In game theory, a payoff matrix is a table in which strategies of one player are listed in rows and those of the other player in columns and the cells show payoffs to each player such that the payoff of the row player is listed first.

"No farmer can never convince you to pay $10 for strawberries when you can buy it from others for 4 dollars." Well you have never been to Whole Foods.

But that's just a theory... A GAME THEORY! THANKS FOR WATCHING.

3:12 Lady: "can you remember the Ad that ran before this video?" Me who uses ad blocker: "My goals are beyond your understanding..."

But hey, that's just a reference... an OVERDONE REFERENCE! THANKS FOR READING.

man........his belt.....................

There's a basic flaw in your version of the Prisoner's Dilemna. If neither confesses, then both are free. For a true Prisoner's Dilemna scenario, the penalty for no confession on either side must be greater than the penalty for being the one who takes a deal against the other who remains silent.

"In this kind of game, if you lose, you're bankrupt" So Monopoly then... I call the top hat

Ad before the video? ...I can't remember a world before adblock.

I don't remember the ad because of adblock =3

This is awesome! I love game theory and this surely is good for the basic understanding of it. Good job, guys!

+5 for the Futurama ship but -10 for "lame co-op games". Competition is important (and has its own fun games like 'Acquire') but learning to co-operate well is almost certainly more important for most people most of the time.

Best Economics Crash Course episode yet! Well explained! Great Analogies!

These are truly awesome videos... Thanks for the work you put into creating them!

With this I am definitely gonna pass micro this semester. Thank you for this crash course. It reiterated everything my teacher said but in another perspective which is something I needed.

They messed it up because the in a proper prison dilemma if they both remain silent they still face a penalty. It should have been: If both confess - both pay $10,000 If both remain silent - both pay $5,000 If X confesses but Y remains silent - X pays $20,000. Y pays $0 If X remains silent but Y confesses -X pays $0 and Y pays $20,000 The idea is that you would confess because the best case scenario is paying nothing and the worst case scenario is paying $20,000. By confessing you assure you will not get the worst case scenario but you might get the best case scenario. While remaining silent has the the second best outcome it runs the risk of also producing the worst outcome. So under the ideas of game theory it would be stupid to remain silent. It's in the other person's best interest to confess... which makes it in your best interest to confess too. However if (as presented above) remaining silent could produce the best outcome, then there is no reason to assume the other person would confess, thus no reason to confess yourself. I'm not an expert in economics but I've studied this a bit. But hey, that's just a theory... A GAME THEORY!

4:30 isn't a prisoner's dilemma. Assuming everyone wants to maximize individual money, both not confessing is a Nash equilibrium. Efficiency is possible here.

This was made very well. I love the basic eco theorys!

"Hear the lamentations of our competition." - Mongol Pizza

Very concise, articulate, and engaging delivery of the material. Thank you so much!

I really got happy and excited when I saw Mr. Clifford here since I wasn't expecting him LMAOO that says a lot

Prisoner's Dilemma explains a lot of things, like why the power blackout last so long, why workers sometimes don't go on strike and other stuff. Great video, thanx!

Excellent crash course short-films. Entertaining and fun to watch while also relevant and informative.

This helped me out so much in my Economics class! Thank You!!!

2016: “If Apple raises the price of the iPhone to 3,000 dollars, then you might switch to Android” 2018: Apple raises price of iPhone to 1,000 dollars starting price, some Android companies also starting to raise price to 1,000 dollars 2020: 3,000 dollar iPhone (?) 🤔🤔

I like you two - keep up the good work!

Thank you- please keep making these great videos. Happy to support.

This channel changed my life. Just love it.

I thought this was gonna be a crossover with game theory

Cool lesson:-) I used to be in Macroeconomics in college and we studied a lot about things like this. That was a hard class to completly understand. Glad I finished it:-)

the best video made for us to understand directly. Appreciate it.

Jacob, you win points for that belt buckle sir! Great episode!!

Co-op games are indeed lame when "game" is a euphemism for the market. But as the prisoner's dilemma illustrates, the best possible global outcome can only result from cooperation (at least, when viewed from a utilitarian perspective). The difficulty, of course, is in giving people a good reason to trust the other party.

the game theory is so intresting!!

Thanks for making it simple. I like when it is made very simple, so you understand.

absolutely informative , very clear

I just realized how important Adblock is for me imagine I have to watch an ad everytime I want to watch a youtube-video... wow that would give me high-end-instant-cancer to go

But hey, thats just a theory, AN ECONIMIC THEORY, THANKS FOR WATCHING

Thank you! This clarifies a lot!

Jacob Clifford thank you so much for this videos !!!!! You rock !!!

I can't believe you didn't do a cross over with Matt Patt from Game Theory.

but that's just a theory a GAME THEORY. Thanks for watching.

one of the best game theory episodes

I finally understand game theory, I always thought the prisoner dilemma was a weird way to put it thanks

I missed the effect where a bigger company (or one with in a economical group) Can actually lower the price so far that a smaller company will topple over because they can't go under the cost price. Or the bigger one can compete not on the selling site of the game but at the buying site. It can buy in a bigger share of the total amount of a particular vital raw product.

Ideally we would have cheap and high quality phones, computers, and game consoles. Except companies focus more on leaving features out for the next generation and easy breaking products.

Very interesting. Thanks, Crash Course.

Thanks for this - it really helped me to stabilise and prolong my cartel ... 👍🏼😎👍🏼

ACDC Belt. Rock on!

"Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist." -- Kenneth E. Boulding

This is one of your best videos yet. I feel like you used the visual aides more effectively and presented the information more clearly than maybe in other videos.

love you jacob clifford and scishow

"do you remember the ad before the video" No, there's this thing called adblock.

Now I want a slice of Mongol Pizza.

thanks its really useful

I love the LSP looking stuffed animals that Plait has on his stand

I like co-op games.

Game Theory??? Where is MatPat???

Just finished my game theory class yesterday!!!🎉

Thank you so much

"Do you remember the ad that played before this video" Ha! Haha.

Coincidentally I like those "lame Co-Op Games"!

The Don Draper quote was absolutely perfect

Fantastic video

The way Apple convinced so many people its basically equivalent phones (actually less capable, and which admittedly expire forcing you to spend more) are better than Android has always amazed me. That's a good example of differentiating to keep your cost high even though you at many points in time had an inferior product. In this case though I think it has more to do with the competition not being streamlined. One year I'd need the top of the line LG to have something better, the next year I'd need the best Samsung. It was hard to anticipate which would come out on top in the next iteration if you were happy to stick to that OS.

To those people who say "What ad? I use an ad blocker." Here's the link to their Patreon and merchandise pages. If you're not willing to support CC via your time, I hope you're willing to support them via your wallet. www.patreon.com/crashcourse store.dftba.com/collections/crashcourse

Dat belt buckle!

you guys are the best in the world thank you so much for creat this video.

you could convince me to buy those CC econ jeans. If I had the money

5:00-5:07- How does Phil know that he'll retain all of his old customers? How does he know that he won't lose some of them to Craig? If Craig's customers can walk to Phil, then surely Phil's customers can walk to Craig too.

love the ACDC belt, I have a Black Sabbath Belt, but that's besides the point, thanks for the explanation.

love your videos!

I finished all my required economics courses to get my commerce degree last semester, and I'll never have to take econ again. Thank God too because I hated that subject. HOWEVER, the one topic in economics I was actually very interested in was game theory and the prisoner's dilemma, this stuff is just so cool!

Ads before RU-vid videos? Hehe, that's a good one.

It is very good! keep the good work.

amazing channel thank you...

"Unless it's some _lame_ co-op thing..." Hey! CHS is the largest co-op and they resent that statement!

But hey, that's just a theory...a GAME THEORY, thanks for watching.

4:45 DAAAAAMN, they were totally outsmarted and played with their instincts and logic. That was brilliant! It appealed to their interesting without them even knowing. What's best it's how this is an obvious integration of many, if not all, of the concepts we learned so far in the series and over the human evolution, most noticebly Tragedy of Common Goods. Thanks to this i learned from a story im tired of hearing.

THE ACDC BELT AT 9:07!!! TOTALLY DIG IT

BUT THAT'S JUST A THEORY..... A GAME THEORY! THANKS FOR WATCHING!

but hey, that's just a theory....

you people are awesome!!

thank you!

I mean, that's just a theory. A GAME THEORY

9:06 "unless it's some lame co op thing" *LMAO YOU OBVIOUSLY NEVER PLAYED PORTAL 2*

the sketch with the two bread guys was really funny

How many people came to this expecting to see MatPat? ME!!!

"MoaR videoos on why cumunism don't not work. Mises for prez 2016." - Internet

I love the random diss towards co op games.

thank you

This doesn't sound like Crash Course... they're not talking at break-neck speed

what kind of a father lets his 7 year old son play call of duty

ACDCLeadership! Sweet! This is good timing, I have an economics exam in June on this stuff. ;_;

No MatPat reference? Sort of dropping the ball on that one....

hey thats just a theory, a game theory thanks for whatching

This is great

Thank you!

I love Craig and Phil. I MISS CRAIG AND PHIL!!!!!! I love you guys too!

bankrupt? its only a theory..... A GAME THEORY!!!! THANKS FOR READING!