Homework Answers
Provided the payoff matrix.
(a). The payoff in the game tree is given below.
(b). The subgame perfect equilibrium for this game would be, for the firm 1 to produce big cars and for firm 2 to produce small cars.
The subgame perfect equilibrium has firm 1 choosing to produce a small car. FALSE
(c). The payoff matrix for this game is given as follows.
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Fim 1 and firm 2 are car producers. Each has the option of producing elther a...
LLALJU 13. 13. 10.00 points Firm 1 and firm 2 are car producers. Each has the...
LLALJU 13. 13. 10.00 points Firm 1 and firm 2 are car producers. Each has the option of producing either a big car or a small car. The payoffs to each of the four possible combinations of choices are as given in the following payoff matrix. Each firm must make its choice without knowing what the other has chosen. Big car Firm 2 Big car 400 for firmn 1 400 for firmn 2 700 for firm 1 600 for firm...
The payoff matte below shows the payoffs for Fim A and Firm B, each of whom...
The payoff matte below shows the payoffs for Fim A and Firm B, each of whom can other cooperate" or "cheat" The numbers in parentheses are (payoff for Apayoll for ) Firm Cooperate Cheat Firma Coorperate (30,30) Cheat 1x, 10) (20,20) TABLE 11-2 Refer to Table 11 -2.1x40, what is the Nash equilibrium in this game? OA (Fim A cheat, Firm B. cheat) OB (Fim A cooperate, Firm B cooperate) OC. (Fim A chat, Firm B. cooperate) OD. (Firm A...
Identify the definition for each term from the following list. 1. Payoff-matrix format 2. Game-tree format...
Identify the definition for each term from the following list. 1. Payoff-matrix format 2. Game-tree format 3. A junction on a game tree. 4. One of the final outcomes of a game tree. 5. Divides the overall game tree into nested subgames before working backward from right to left. 6. A mini-game within the overall game. 7. The process of backward induction that relies on both firms having perfect information about the decisions made in each subgame. 8. A statement...
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm face...
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm faces a marginal cost of production of 4 per unit The timing of the game is as follows. In Period 1, firm 1 chooses the quantity q it will sell. In Period 2, firm 2 (who observed firm 1s choice in period 1) chooses whether or not to enter the market. If firm 2 chooses to enter it must pay an entry fee...
Firms A and B form a cartel. Once the cartel is formed, each firm has the option of either comply...
Firms A and B form a cartel. Once the cartel is formed, each firm has the option of either complying with its cartel agreement by keeping its price high and its production low or cheating on the agreement by lowering its price and increasing its production. The adjacent payoff matrix shows the firms' economic profits. Firm B Comply Cheat If the game is played only once, what is the Nash equilibrium? Firm B: $600 Firm B: $900 Comply A. The...
2. Two players are bargaining, just as in the Rubinstein's alternating offers model studied in class,...
2. Two players are bargaining, just as in the Rubinstein's alternating offers model studied in class, over the division of a cake of size 1. There are two differences from the standard model: first, there is no discounting. Second, while an acceptance guarantees implementation of the going proposal, following every rejection there is an exogenous probability p > 0 that the game will completely break down. If that happens, each player gets gets 0 <b < 1/2. If not, the...
1. Consider the coupon game. But suppose that instead of decisions being made simultaneously, they are made sequentially, with Firm 1 choosing first, and its choice observed by Firm 2 before Firm 2 ma...
1. Consider the coupon game. But suppose that instead of
decisions being made simultaneously, they are made sequentially,
with Firm 1 choosing first, and its choice observed by Firm 2
before Firm 2 makes its choice.
a. Draw a game tree representing this game.
b. Use backward induction to find the solution. (Remember that
your solution should include both firms’ strategies, and that Firm
2’s strategy should be complete!)
2. Two duopolists produce a homogeneous product, and each has a...
6. Consider a sequential game with 3 players. Player 1 can choose A or B. Player...
6. Consider a sequential game with 3 players. Player 1 can choose A or B. Player 2 can choose C, D, E, or F (depending on what player 1 chooses). Player 3 can choose G, H, I, J, K, L, M, or N (depending on what player 1 and 2 choose). Player 1 (P1) goes first, player 2 (P2) goes second, and player 3 (P3) goes third. Payoffs are written as the payoffs for P1, P2, and the for P3....
Consider two firms 1 and 2 engaging into the following one-shot game: if firm 1 advertises...
Consider two firms 1 and 2 engaging into the following one-shot game: if firm 1 advertises and firm 2 does not, firm 1 will make $20 million in profits and firm 2 will make $6 million. If firm 2 advertises and firm 1 does not, firm 1 will make $2 million and firm 2 will make $6 million. If firm 1 advertises and firm 2 advertises, each firm earns $10 million. If neither firm advertises, firm 2 will make $8...
1. Each of two firms has one job opening. The firms offer different wages: firm 1...
1. Each of two firms has one job opening. The firms offer different wages: firm 1 offers the wage $10 per hour, and firm 2 offers the wage $12 per hour. There are two workers, each of whom can apply to only one firm. The workers simultaneously decide whether to apply to firm 1 or to firm 2. If only one worker applies to a given firm, that worker gets the job; if both workers apply to one firm, the...
LLALJU 13. 13. 10.00 points Firm 1 and firm 2 are car producers. Each has the option of producing either a big car or a small car. The payoffs to each of the four possible combinations of choices are as given in the following payoff matrix. Each firm must make its choice without knowing what the other has chosen. Big car Firm 2 Big car 400 for firmn 1 400 for firmn 2 700 for firm 1 600 for firm...
The payoff matte below shows the payoffs for Fim A and Firm B, each of whom can other cooperate" or "cheat" The numbers in parentheses are (payoff for Apayoll for ) Firm Cooperate Cheat Firma Coorperate (30,30) Cheat 1x, 10) (20,20) TABLE 11-2 Refer to Table 11 -2.1x40, what is the Nash equilibrium in this game? OA (Fim A cheat, Firm B. cheat) OB (Fim A cooperate, Firm B cooperate) OC. (Fim A chat, Firm B. cooperate) OD. (Firm A...
Identify the definition for each term from the following list. 1. Payoff-matrix format 2. Game-tree format 3. A junction on a game tree. 4. One of the final outcomes of a game tree. 5. Divides the overall game tree into nested subgames before working backward from right to left. 6. A mini-game within the overall game. 7. The process of backward induction that relies on both firms having perfect information about the decisions made in each subgame. 8. A statement...
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm faces a marginal cost of production of 4 per unit The timing of the game is as follows. In Period 1, firm 1 chooses the quantity q it will sell. In Period 2, firm 2 (who observed firm 1s choice in period 1) chooses whether or not to enter the market. If firm 2 chooses to enter it must pay an entry fee...
Firms A and B form a cartel. Once the cartel is formed, each firm has the option of either complying with its cartel agreement by keeping its price high and its production low or cheating on the agreement by lowering its price and increasing its production. The adjacent payoff matrix shows the firms' economic profits. Firm B Comply Cheat If the game is played only once, what is the Nash equilibrium? Firm B: $600 Firm B: $900 Comply A. The...
2. Two players are bargaining, just as in the Rubinstein's alternating offers model studied in class, over the division of a cake of size 1. There are two differences from the standard model: first, there is no discounting. Second, while an acceptance guarantees implementation of the going proposal, following every rejection there is an exogenous probability p > 0 that the game will completely break down. If that happens, each player gets gets 0 <b < 1/2. If not, the...
1. Consider the coupon game. But suppose that instead of
decisions being made simultaneously, they are made sequentially,
with Firm 1 choosing first, and its choice observed by Firm 2
before Firm 2 makes its choice.
a. Draw a game tree representing this game.
b. Use backward induction to find the solution. (Remember that
your solution should include both firms’ strategies, and that Firm
2’s strategy should be complete!)
2. Two duopolists produce a homogeneous product, and each has a...
1. Each of two firms has one job opening. The firms offer different wages: firm 1 offers the wage $10 per hour, and firm 2 offers the wage $12 per hour. There are two workers, each of whom can apply to only one firm. The workers simultaneously decide whether to apply to firm 1 or to firm 2. If only one worker applies to a given firm, that worker gets the job; if both workers apply to one firm, the...
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