Week 4 -- Competitive Advantage

This concept is not English, at least, not the English most people speak.

In this class, Competitive Advantage means that, if a person transacts, competition ensures that he or she is going to get some utility above and beyond his or her BATNA. In the washing machine example, you would have a competitive advantage, because the competition between the two sellers ensures that you’ll get $150 of utility. If you don’t transact? You’ll get your BATNA, which is less than that. But we say you have competitive advantage because, just by transacting, you're guaranteed some surplus. Simple, right?