Page 24 - Microeconomics, Fourth Edition

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xxii CONTENTS
APPENDIX The Cournot Equilibrium and the Inverse The Nash Equilibrium 574
Elasticity Pricing Rule 570 The Prisoners’ Dilemma 574
LEARNING-BY-DOING EXERCISES Dominant and Dominated Strategies 575
Games with More Than One Nash Equilibrium 579
13.1 Computing a Cournot Equilibrium 536
Mixed Strategies 583
13.2 Computing the Cournot Equilibrium for Two or
Summary: How to Find All the Nash Equilibria in a
More Firms with Linear Demand 540
Simultaneous-Move Game with Two Players 584
13.3 Computing the Equilibrium in the Dominant Firm
Model 548 14.2 The Repeated Prisoners’ Dilemma 584
13.4 Computing a Bertrand Equilibrium with Horizontally 14.3 Sequential-Move Games and Strategic
Differentiated Products 556 Moves 590
Analyzing Sequential-Move Games 590
CHAPTER 14 Game Theory and Strategic The Strategic Value of Limiting One’s Options 593
Behavior 571 LEARNING-BY-DOING EXERCISES
What’s in a Game? 14.1 Finding the Nash Equilibrium: Coke versus Pepsi 578
14.2 Finding All of the Nash Equilibria in a Game 582
14.1 The Concept of Nash Equilibrium 573
14.3 An Entry Game 592
A Simple Game 573
PART 7 SPECIAL TOPICS

CHAPTER 15 Risk and Information 604 15.4 The Willingness to Pay for Insurance 621
15.5 Verifying the Nash Equilibrium in a First-Price
What Are My Chances of Winning?
Sealed-Bid Auction with Private Values 636
15.1 Describing Risky Outcomes 606
Lotteries and Probabilities 606
Expected Value 608 CHAPTER 16 General Equilibrium Theory 648
Variance 608 How Do Gasoline Taxes Affect the Economy?
15.2 Evaluating Risky Outcomes 611 16.1 General Equilibrium Analysis: Two Markets 650
Utility Functions and Risk Preferences 611 16.2 General Equilibrium Analysis: Many
Risk-Neutral and Risk-Loving Preferences 614 Markets 654
15.3 Bearing and Eliminating Risk 617 The Origins of Supply and Demand in a Simple
Risk Premium 617 Economy 654
When Would a Risk-Averse Person Choose to Eliminate The General Equilibrium in Our Simple Economy 660
Risk? The Demand for Insurance 620 Walras’ Law 664
Asymmetric Information in Insurance Markets: Moral 16.3 General Equilibrium Analysis: Comparative
Hazard and Adverse Selection 622 Statics 665
15.4 Analyzing Risky Decisions 627 16.4 The Efficiency of Competitive Markets 669
Decision Tree Basics 627 What Is Economic Efficiency? 669
Decision Trees with a Sequence of Decisions 629 Exchange Efficiency 670
The Value of Information 631 Input Efficiency 676
15.5 Auctions 633 Substitution Efficiency 678
Types of Auctions and Bidding Environments 634 Pulling the Analysis Together: The Fundamental Theorems
Auctions When Bidders Have Private Values 635 of Welfare Economics 681
Auctions When Bidders Have Common Values: 16.5 Gains from Free Trade 682
The Winner’s Curse 639 Free Trade Is Mutually Beneficial 682
Comparative Advantage 686
LEARNING-BY-DOING EXERCISES
APPENDIX Deriving the Demand and Supply Curves
15.1 Computing the Expected Utility for Two Lotteries
for General Equilibrium in Figure 16.9 and Learning-
for a Risk-Averse Decision Maker 614
by-Doing Exercise 16.2 692
15.2 Computing the Expected Utility for Two Lotteries:
Risk-Neutral and Risk-Loving Decision Makers 616 LEARNING-BY-DOING EXERCISES
15.3 Computing the Risk Premium from a Utility 16.1 Finding the Prices at a General Equilibrium with
Function 620 Two Markets 654