Question

Question 14 1 pts Woolworths and Coles are considering setting up a supermarket in a new suburb. Each firm simultaneously choose to E (enter) or N (not enter). The payoffs are -10 to each if the both E. Both firms get 10 if they both opt to N. If one firm opts for E and the other N, then the firm that opted for E gets 30 and the other 0. What are the pure strategy Nash equilibrium? (N, E), for Woolworths and Coles, respectively (E, N) (N, N) (E, E) O (N, E) and (E, N) Question 15 1 pts Woolworths and Coles are considering setting up a supermarket in a new suburb. Woolworths chooses to either enter (E) or not (N). This is observed by Coles who then must also choose to E or N. The payoffs are -10 to each if the both E. Both firms get 10 if they both opt to N. If one firm opts for E and the other N, then the firm that opted for E gets 30 and the other 0. What is the subgame perfect equilibrium? (E; E) for Woolworths and Coles, respectively (N;N if N and E if E) (E; N if E, E if N) (E, N) and (N, E) None of the above

Answer 1

(1) Pay off mateix Woolworths / Coles I e T (-10,-10) (o, 30t) IN / (30*, ut) I (10,0) SEN & CNE), for pure strategy NE, The Nash equilibena ane! (NE) & (N, 6) Game backwards 6 Solving coles Coles (-10-10) (300) (0,31) 110, 10) Now, Sw= LE,N}, Scolg= {EN} x 2E,N} - LEF, EN, NE, Na} NE: Payoff Matoux ER EN NE NN w Pure -10,10 -10,10 + (300) & (3020) /*(0,30) & (10,10) (9,30) Clo,le) Ne strategy. <E, NE), LE, NN), CN, E) . Ans. EiNift, & if