Game Theory 101 - Chain Store Paradox

Explore the intricacies of the Chain Store Paradox in this 26-minute video lecture on game theory. Delve into the strategic decision-making process of chain stores facing multiple potential competitors across different markets. Learn how to analyze the perfect Bayesian equilibrium and understand why chain stores might engage in seemingly irrational price wars. Examine both complete and incomplete information scenarios, and discover how bluffing behavior emerges through semi-separating strategies. Follow along as the lecture breaks down complex concepts including separating equilibrium, pooling equilibrium, and the resolution of the apparent paradox. Gain valuable insights into strategic business decisions and the application of game theory in real-world market scenarios.

Introduction.
Complete Information Setup.
Solving the Complete Information Game.
Firms with Credible Retaliation.
Incomplete Information Setup.
Solving the Incomplete Information Game.
Separating Equilibrium.
Pooling Equilibrium.
Semi-Separating Equilibrium.
Resolving the "Paradox".