Simultaneous Move Game:

It means that there are players with their pay-offs and the strategy chosen which have an impact on their net gains. And importantly, all the players in the game simultaneously choose their strategies and pay-offs. Cournot model of duopoly is an example of a simultaneous move game. 

Example: Duopoly model in a game theoretic set-up:

1) Number of players - 2 firms (A, B)

2) Strategies - Each duopolist anticipates a cut in price by 5%

The sum of the pay-offs is given in thousand rupees by the following matrix:

A common decision rule in game theory is the maximin. It says to choose that strategy which maximises the minimum pay-off. In the present discussion, this rule means that each firm expects its rival to respond in a manner that ensures the worst possible outcome to realise.  

Suppose A's strategy s to cut its price. Assuming that B responds to cause A to do its worst, A will end up with a loss of Rs.60, 000. If A's strategy is not to cut price then assuming that B reacts, causing A to do its worst, A will lose Rs.80, 000. Since A would be worse off with the second strategy, A will choose to cut its price.

Similarly, consider B's two strategies.  If B cuts the price and A responds to cause B to do its worst, B loses Rs. 100,000. Thus, B is better off cutting the price by 5%.

Thus, both A and B end up cutting prices by 5%, and they both lose - total loss being Rs. 140000. The best joint strategy is not to change the prices. However, players individually choose strategies that harm both. This problem is known as the prisoner's dilemma and we will discuss it in Block 8.