10. Refer to the payoff matrix below. Which outcome reflects the dominant strategy?University SubsRuns a 2-for-1promotionKeeps price highMakesLoses$1,000$5,000Runs a 2-for-1promotionMakesMakes$1,000$15,000SavorySandwichesMakes$15,000Makes$10,000|Keeps price highLoses$5,000Makes$10,000A. top leftB. top rightC. bottom leftD. bottom right

The dominant strategy is a term used in game theory to describe a situation in which one player has…

10. Refer to the payoff matrix below. Which outcome reflects the dominant strategy? University Subs Runs a 2-for-1 promotion Keeps price high Makes Loses $1,000 $5,000 Runs a 2-for-1 promotion Makes $15,000 Makes $1,000 Savory Sandwiches Makes $15,000 Makes $10,000 Keeps price high Makes $10,000 Loses $5,000 A. top left B. top right C. bottom left D. bottom right

10. Refer to the payoff matrix below. Which outcome reflects the dominant strategy? University Subs Runs a 2-for-1 promotion Keeps price high Makes Loses $1,000 $5,000 Runs a 2-for-1 promotion Makes $15,000 Makes $1,000 Savory Sandwiches Makes $15,000 Makes $10,000 Keeps price high Makes $10,000 Loses $5,000 A. top left B. top right C. bottom left D. bottom right

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Game Theory / Economics
1
1. Consider the following game: There are two companies: Nike and Adidas. They both need to make a choice: to increase the marketing costs or not change it. If both companies increase, they both will have $100 million profit. If neither company change, each will have a profit of $50 million. If only one company increases marketing costs, its profit will be $120 million and the other airline's profit will be $40 million. Draw the payoff matrix. Find the Nash equilibrium. Explain why this is the Nash equilibrium.
6)Game Theory: The Prisoners’ Dilemma: Assume that the Wilson and Spalding athletic equipment companies are in a one-shot game for market share and profits, but that they have the option of choosing only one of two possible price strategies for basketballs: $20 or $80. Obviously if they choose different strategies, the firm with the lower price will win the entire market. The firms face the following payoff matrix (See Chap. 10). Wilson\ \Spalding Wilson $ 20 Price Wilson $ 80 Price Spalding $ 20 Price $ 400, $ 400 $ 1500, $ 0 Spalding $ 80 Price $ 0, $ 1500 $ 1000, $ 1000 What strategy will each firm choose? Why? Which strategy is dominant? Which strategy is preferred by each firm? What will be the outcome of the one-shot game? Where is the Nash equilibrium? Which outcome would be best for the two firms? What will happen if the game is repeated an infinite number of times?
QUESTION 12 This is a HOT SPOT question. You will need to evaluate the picture of the game below, and answer the question by clicking on a specific area (the hot spot) of the picture. Question: Are there any dominant strategies in this game? If there are, click on the box that corresponds to that dominant strategy (either UP, DOWN, LEFT, or RIGHT). If there aren't any anywhere outside of these boxes. If there are dominant strategies for both players, clicking on only one of them will suffice. Player 1 Player 2 Selected Coordinates Clear UP DOWN LEFT 45, 80 70, 100 RIGHT 50, 150 60, 60
Refer to the following payoff table: Firm A's Advertising Budget Multiple Choice Low O Medium High Firm A High Firm A High A Firm B Medium D G Low $900, $900 $1,000 $800 Firm B's Advertising Budget Medium B E H $820, $1,220 $950, $1,025 $875, $920 $800, $875 After the first round of elimination, are there any dominant strategies? If so, which one(s)? C Neither firm has a dominant strategy after the first round. F High $1,060, $1,100 $1,040, $1,000 $1,025, $1,175
12. An important characteristic of a dominant strategy is that: Select one: a. it is the best strategy to dominate your opponents b. it always leads to a Nash equilibrium where all players equally well off c. it can prevent the game reaching a Nash equilibrium d. it is the best strategy for a player, regardless of whatever strategy the opponent chooses
Table 8. This table shows a game played between two players, A and B. The payoffs are given in the table as (Payoff to A, Payoff to B). A Select one: Up Middle Down Left (4,2) a. Middle-Center O b. Down-Center (3, 1) (1,3) B Center (2,5) (5, 3) (4,4) Refer to Table 8. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). Which of the following outcomes represents a Nash equilibrium in the game? Right (3, 3) (5,2) (6, 1) O c. Up-Left O d. More than one of the above is a Nash equilibrium in this game.
Explain the nature of game theory. What current issue could this be applied to?
Dizz Cut price Maintain price Perlis Cut price (-1,-1) A (2,-2) B Maintain price (-2,2) (1,1) D Figure 12 Payoff matrix for two firms in oligopoly Two firms, Perlis and Dizz, produce washing powder in a market characterised by oligopoly. Each firm can increase its market share and profits by cutting its price relative to its rival. However if both firms cut prices they both suffer a fall in profit. This situation may be characterised as a game and Figure 12 shows the payoff matrix for this game. Figure 12 also labels each cell in the payoff matrix with a letter, A, B, C or D. Based on the information in the payoff matrix, decide which cells, if any, correspond to a Nash equilibrium. Select one answer. Select one: O There is no Nash equilibrium O D O A O A and D
1.Draw the extensive form representation of this game. 2. Find a subgame perfect equilibrium (SPE) of this game. focus on pure-strategies only.
...is one of the terms of pay off and risks in Game theory. Select one: a. Low profit b. High profit c. Low price d. Current price