commitment expending resources on a particular action in order to demonstrate that the action will be carried out






dominant strategy an activity that will be carried out no matter what rivals do

dominated strategy an activity that will not be carried out because there are better, more profitable activities no matter what rivals do






expected value value weighed by probability of occurrence






game theory mathematical representation of strategic behavior






Nash equilibrium situation in which no one has an incentive to change current actions






prisoner's dilemma a situation in which a rival's actions lead to a less than best solution






repeated trials carrying out activities more than once

risk aversion avoidance of risk; when someone prefers a result with certainty over the possibility of receiving either a higher or lower result

Risk premium the price that people will pay to avoid risk






scorched-earth policy a strategy for penalizing those who cheat on agreements--destroying all assets so that others cannot use them

sequential game game in which decisions are made in steps, with each step taking place at a different point in time

simultaneous game game in which decisions are made at the same time






tit-for-tat a strategy for penalizing those who cheat on agreements--doing unto others what they do unto you