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c14gametheoryandstrategicbehavior.qxd 8/6/10 11:56 AM Page 571

14 GAME THEORY AND

14.1 STRATEGIC BEHAVIOR
THE CONCEPT OF NASH APPLICATION 14.1 Everyone Loses Except
EQUILIBRIUM the Lawyers
APPLICATION 14.2 Chicken in Orbit: Winning
the Battle for Satellite Radio in North America
APPLICATION 14.3 Bank Runs
14.2

THE REPEATED PRISONERS’ APPLICATION 14.4 Shoot-to-Kill, Live-and-Let-
DILEMMA Live, or Tit-for-Tat?
APPLICATION 14.5 Collusion in Japanese Sumo
Wrestling
APPLICATION 14.6 The Cost of War
14.3

SEQUENTIAL-MOVE GAMES APPLICATION 14.7 Irreversibility and Credible
AND STRATEGIC MOVES Strategies by Airlines

What’s in a Game?
The market for automobiles in China experienced a boom during the first decade of the new millennium.
By 2004 the number of automobiles in Beijing alone was growing at 1,000 per week, and in some years the
1
demand nationally was growing at as much as 50 percent per year. A wave of investment in production
capacity transformed a country that had few private automobiles 25 years ago. By 2009 the number of light
vehicles sold in China had equaled the number sold in the United States, a remarkable benchmark achieved
several years earlier than experts had predicted before the unfolding of the worldwide economic crisis. 2

1 “The Rich Hit the Road,” The Economist, June 17, 2004.
2 “Motoring Ahead: More Cars Are Now Sold in China than in America,” The Economist online, October 23,
2009, http://www.economist.com/daily/news/displaystory.cfm?story_id=14732026&fsrc=nwl (accessed
May 4, 2010).

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