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7. Cooperative solution to noncooperative game
Invited abstract in session WB-40: Experimental economics and game theory 1, stream Experimental economics and game theory.
Wednesday, 10:30-12:00Room: 96 (building: 306)
Authors (first author is the speaker)
| 1. | zvi winer
|
| Economics, Western Galilee College | |
| 2. | Avishay Aiche
|
| Western Galilee Academic College |
Abstract
Content analysis reveals that in many markets in the State of Israel where regular payment is required for continuous service, usually monthly, a situation can be seen where the price of the service creeps up consistently and even though the consumer has an option to switch to another company, at the starting price he paid, he remains loyal to the company that increases its service consistently and continuously. The purpose of this paper is to provide a theoretical model according to which the company that raises its' price capitalize on the consumer loyalty. The subgame perfect equilibrium resulting from the model supports the empirical evident. According to the perfect equilibrium the firm initially offers loss prices, the consumer remains loyal to the firm and the prices in subsequent periods compensate for the loss in the first periods.
Keywords
- Game Theory
- Economic Modeling
- Decision Analysis
Status: accepted
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