foreseen, while others may seem infinite. Long-run decisions, such as investment
decisions, may resemble the ‘one-off’ situation; although the situation
may be repeated in the future, the time interval between decisions may be
several years, and the next decision scenariomay involve quite different payoffs.
9.2 Static games
As stated above, these games involve simultaneous moves, as in the PD game.
We shall concern ourselves at this stage only with games involving perfect
information, and with ‘one-off’ situations; all the players know with certainty
all the possible payoffs, and the game is not repeated. The nature of this type of
game raises the following questions:
1 How does a firm determine strategy in this type of situation?
2 What do we mean by an equilibrium strategy?