Econ of Sports Exam 1

The economic analysis of competitive sports, the institutions that organize competitive sports, and other economic activity that is related to the consumption and production of competitive sports

An individual or team is engaged in a strategic interaction that depends on the actions of others

A competition between players

The player's valuations of the outcome of the game. Because we are dealing with sports, the payoffs will be things like "winning" and "losing"

Determines a players payoff given the combination of actions by the other players

Just that--the rules. They determine who goes first or if you move simultaneously with other players. This is given--players do not get to set the rules of the game.

Specifies the action a player will make conditional on the information available and for any possible contingency. Strategy is all you, and has not yet considered the behavior of others.

A set of actions a player takes to increase his/her payoff, taking into account the possible actions of other players

One that maximizes the expected payoff (for some games this is the same as minimizing the expected loss)

Occurs when a player's optimal strategy depends on the actions of others

• Players maximize payoffs
• Games have common knowledge
• Games are static
  • Both players act simultaneously
• Complete information
  • I know your payoff as well

No matter what the other party does, the strategy that you pursue gets you the highest possible payoff

The strategy that maximizes payoffs given what the other players do (a dominant strategy IS a best response, but a best response is not always a dominant strategy)

Given what I do, your strategy is optimal, and given what you do, my strategy is optimal. Each player is following their best response given what the other players are doing.

A strategy in which you randomize what you are going to do