Question

It would not be 2020 if we did not have an assignment on Covid-19! So for this first assignment I propose we look at the Covid testing strategy and understand, in game theoretic terms, why some people refuse to get tested while others happily oblige. In particular, we want to focus on the "random” testing side of things. So let's assume you are home, and someone knocks at your door. You can choose to answer the door or not. Should you answer the door, the persons who knocked on your door offer you to be tested for Covid on the spot. You can accept or refuse to be tested with no consequence in case of a refusal. If you agree to be tested, you must not leave your house until you get your test result For the purpose of this assignment, we assume that not answering the door gives you a payoff of zero, and that the cost of being tested is zero (i.e. the slight discomfort you may experience from testing is so negligible that we can ignore it). Answering the door and agreeing to be tested, means that you feel good about yourself, but you also lose money and freedom from having to isolate while waiting for the results. Let us denote the amount of "happiness" from being tested be equal to H. This captures the feel good glow of "doing the right thing". While the stress incurred from having to isolate waiting for the test result is captured by L. We assume that if you refuse to be tested (for whatever reason), you incur a loss of happiness equivalent to H. 1. Propose a possible extensive representation of the game described above. Clearly, there is only one player, and it is you! 2. Describe your strategy space. 3. What is the condition that H and L must satisfy for individuals to agree to open the door and get tested? 4. Understanding that individuals vary regarding the level of happinness they may get from being tested, and that this level could be quite low (very close to zero). Which policy (focusing only on the values of H and L) could convince everyone to open the door and be tested? Translate this finding into actual policy.

Answer 1

outcome therefore we must have taux ANSWER: Asuppose, if airline manager needs that Doovid and mike must say truth that is the Truth be an outcome and this would be Possible when 1X1-b for david when Mike chooses truth and for Mike too when David chooses Truth → But we need only truth, truth as an Therefore values are 120 and Olbllo B care We also know that a>0 and b>=0 then any value for bel would always marke players to choose truth and, when other player chooses truth. ✓ Manager who is present here, must tauke enough care that clie, he won't be an output there fore he must tauke of la more than "b" than "b" orelse we will have (lie, ie as another outcome and this will reduce the welfare for manager: The refore he must focus more to have a> always and au>i>b for sure to keep (Truth, Truth) as one and only Nash equilibrium of this game.

he ANSWER: The law of demand states that there is a negative relationship between price and quantity demanded when all the other factors are maintained constant - This law is valid of fouctors such as other price of the product are assumed to be constant other factors may tastes, number of buyers, income, price of related goods etc.. - As per the law off demand, more Quantity demanded at a low price and also viceversa Therefore the relationship between the Price and quantity would be an inverse relationship. Hence, the domand curve will be tends towards downwoord sloping. market demand curve is generally obtained by adding up horizontally all the demand curves of the individual consumers in the market.