The game has two Nash equilibrium which are (pay,pay) and (don`t,don`t). Neither of the player has any incentive to deviate from the set of strategy as it maximizes their payoff given the strategy chosen by the player. For instance, if Ample has chosen to pay then the best possible strategy for Millmart is also to pay because the payoff is 5 when paying and 3 when not paying. Hence 5,5 is the Nash equilibrium. Similarly (4,4) is also the Nash equilibrium.
Each player has risk dominant strategy as don`t but the expected payoff is 4/5 and not 2/5.
Problem 2 Game 2 represents the interaction between firms choosing to restrict emissions or not. Game...
11. The demand for a monopolist's product is given by Q - 400 4P while the monopolist's marginal cost is given by MC-2Q The profit-maximizing quantity of output for this monopolist is A) 100 C) 40 B) 44-44 D) 20 There is a payoff matrix of two firms; their different profits are listed when they choose collusion or competition (answer 14-15). firm B collusion 27.5 19, 19 competition competition14, 14 5. 28 firm A collusion 12. In the game above,...
China BAU Restrict BAU Restrict China Restrict BAU ealra impontaust WQ3. EXERCISE 4.14 NASH EQUILIBRIA AND CLIMATE CHANGE Think of the problem of climate change as a coordination game between two countries called China and the US. Each country has two possible strategies for addressing global carbon emissions:Restrict (taking measures to reduce emissions, for example by taxing the use of fossil fuels) andBAU (the Stern report's 'business as usual' scenario). Figure 4.17 describes the outcomes (renamed Fig.3a) and hypotheticapayoffs (Figs....
11. The demand for a monopolist's product is given by Q-400 4P while the monopolist's marginal cost is given by MC- Q The profit-maximizing quantity of output for this monopolist is A) 1o0 B) 44-44 D) 20 There is a payoff matrix of two firms; their different profits are listed when they choose collusion or competition (answer 14-15). firm B competition 4.14 5. 28 collusion 27,5 19, 19 firm A competition collusion 12. In the game above, who has dominant...
. The demand for a monopolist's product is given by Q monopolist's marginal cost is given by MC -3 The profis-ma quantity of quantity output for this monopolist is A) 10o C) 40 8) 4444 D) a0 There is a payoff matrix of two flems: their collusion or competition (answer 14-15) differens profits are listed when they choose firm B competition firm A competition! 14.14 27.5 collusion 5. a8 9.19 2. In the game above, who has dominant strategy A)...
3. Player 1 and Player 2 are going to play the following stage game twice: Player 2 Left Middle Right Player 1 Top 4, 3 0, 0 1, 4 Bottom 0, 0 2, 1 0, 0 There is no discounting in this problem and so a player’s payoff in this repeated game is the sum of her payoffs in the two plays of the stage game. (a) Find the Nash equilibria of the stage game. Is (Top, Left) a...
Consider a game being played between player 1 and player 2. Player 1 can choose T or B. Player 2 can take actions Lor R. These choices are made simultaneously. The payoffs are as follows. If 1 plays T and 2 plays L, the payoffs are (0, 0) for Player 1 and 2, respectively. If 1 opts of B and 2 L, the payoffs are (5,7). If 1 plays T and 2 R, the payoffs are (6,2). Finally, both players...
2. Consider the following sequential game. Player A can choose between two tasks, Tl and T2. After having observed the choice of A, Player B chooses between two projects Pl or P2. The payoffs are as follows: If A chooses TI and B chooses P1 the payoffs are (12, 8), where the first payoff is for A and the second for B; if A chooses T1 and B opts for P2 the payoffs are (20, 7); if A chooses T2...
2. Consider the following sequential game. Player A can choose between two tasks, TI and T2. After having observed the choice of A, Player B chooses between two projects P1 or P2. The payoffs are as follows: If A chooses TI and B chooses Pl the payoffs are (12.8), where the first payoff is for A and the second for B; if A chooses TI and B opts for P2 the payoffs are (20,7); if A chooses T2 and B...
The table below is the payoff marrix for a simple two-firm game Firms A and B are bidding on a government contract and each f's bid is not known by the other form. Each firm can bid other $14.000 or 55.000 The cost of completing the project for each firm is 53.000 The low bid firm will win the contractat its stated price the high dem wilgot nothing the two bids are equal, the two firms wil split the price...
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...