When analyzing the behavior of oligopolists,which of the following is crucial for the success of game theoretic analysis?
A) Payoffs do not need to reflect the true payoffs of the oligopolists, they just need to be greater than or equal to zero.
B) Assume that oligopolists always move simultaneously.
C) Do not construct the payoffs of the oligopolists to be interdependent, as the payoff of one player usually does not affect the payoff of the other players.
D) Make sure the problem you are considering is of a one-shot or repeated nature, and you model it accordingly because the order in which players make decisions is important.

Question

Quizplus · Accepted Answer

It is crucial to ensure that the problem being analyzed is of a one-shot or repeated nature and modeled accordingly because the order of decision-making and the potential for future interactions can significantly impact the strategies of the oligopolists. Option A is incorrect because payoffs should accurately reflect the true payoffs of the oligopolists. Option B is incorrect because oligopolists may move either simultaneously or sequentially. Option C is incorrect because payoffs are often interdependent in oligopoly situations.

When Analyzing the Behavior of Oligopolists,which of the Following Is