Simultaneous Games

Simultaneous games are discussed in detail in this chapter. In simultaneous games, the players make their decision at the same time or cannot observe how their co-player decides. The chapter illustrates how considerations of dominance can be used to determine the equilibrium or the expected outcome of the game. The fundamental solution concept of a Nash equilibrium is introduced and the conditions of existence are discussed. With discrete strategies, the existence of a Nash equilibrium is not necessarily guaranteed, which leads to the concept of mixed strategies, in which the players play each of their pure actions with a certain probability. The chapter also discusses the different conflict structures that are represented in games and correspond to certain situations from everyday life and the world of business. The chapter also discusses whether the expected game outcomes are efficient from an economic point of view, i.e., whether there is potential for improvement. Finally, it is shown how an equilibrium can also be calculated for continuous strategies.