Econ Movies: Economics in The Dark Knight

Introduction

• Hosted by Mr. Clifford
• Focus on economic concepts in The Dark Knight
• Key Quote: "If you're good at something, never do it for free."

Microeconomics: Oligopolies

• Oligopoly: Industry controlled by a few large producers
• Example: U.S. wireless cell phone market (Verizon, AT&T, Sprint, T-Mobile)
• Competition keeps prices down, but collusion (illegal) can lead to high prices
  • Collusion: Unethical and dangerous
• Firms in an oligopoly are interdependent
  • Decisions affect competitors
  • Use game theory to strategize

Game Theory

• Study of strategy
• Example from The Dark Knight: Social experiment with two boats
  • Each boat has a remote to blow up the other
  • Choice affects both outcomes

The Prisoner's Dilemma

• Two prisoners with the choice to confess or deny a crime
• Outcomes:
  • Both deny: 10 years each
  • Both confess: 20 years each
  • One confesses, the other denies: Confessor goes free, denier gets 30 years
• Game theory helps in deciding best strategy considering opponent's potential decisions

Game Theory in the Comic Book Industry

• Industry example: Oligopoly between Marvel and DC Comics
  • Marvel: 37% market share
  • DC Comics: 31% market share

Decision-Making Example

• DC Comics deciding between Alfred or Joker comic series
• Marvel choosing between Jarvis or Mandarin
• Game theory matrix shows potential profits:
  • DC's dominant strategy: Choose Joker
  • Marvel has no dominant strategy

Dominant Strategy

• Strategy that should be chosen regardless of the opponent's actions
• DC has a dominant strategy (Joker), Marvel does not

Nash Equilibrium

• Outcome where each firm maximizes profit while considering the other's actions

Conclusion

• Reading game theory matrices and finding dominant strategies takes practice
• Game theory is crucial in oligopolistic competition to strategize effectively.