3) Recently, a major question in the news is why the Afghan army collapsed so quickly andunexpectedly in the face of the Taliban offensive. To help understand the situation, consider thefollowing simplified model of the situation. Assume that there are two Afghan soldiers in thesame unit. Each can stay and fight the Taliban or desert. If both stay and fight, they will win anybattle against the Taliban, which each values at 100 utility. If either soldier deserts, the Talibanwins, which they each values at 0 utility. In addition, if only one soldier stays, that soldier willbe killed by the Taliban, which he values at -1000 utility. In addition, the Taliban is offering abounty to any soldier that deserts. ne soldier does not care about this, and would not take thebounty, while the other values the bounty at 50 utility.a. Draw the game based on this scenario.b.Find all pure strategy Nash equilibriac. Find the mixed strategy Nash equilibriumd. What does this game and the equilibria say about why the Afghan army collapsedso suddenly? Consider that there are multiple equilibria in this game. Part 2: Nash equilibria by converting to strategic formIn the following problems, convert the extensive form game into a normal/strategic form game.Then find all pure strategy Nash equilibria. (Note, I am asking you to find the basic Nashequilibria, not the subgame perfect Nash equilibria)5)4,1W22,3AX2,4A3,2BQY3,3B22D1, 11,2

A mathematical framework known as game theory can be used to analyze and forecast how rational…

3) Recently, a major question in the news is why the Afghan army collapsed so quickly and unexpectedly in the face of the Taliban offensive. To help understand the situation, consider the following simplified model of the situation. Assume that there are two Afghan soldiers in the same unit. Each can stay and fight the Taliban or desert. If both stay and fight, they will win any battle against the Taliban, which each values at 100 utility. If either soldier deserts, the Taliban wins, which they each values at 0 utility. In addition, if only one soldier stays, that soldier will be killed by the Taliban, which he values at -1000 utility. In addition, the Taliban is offering a bounty to any soldier that deserts One soldier does not care about this and would not take the

3) Recently, a major question in the news is why the Afghan army collapsed so quickly and unexpectedly in the face of the Taliban offensive. To help understand the situation, consider the following simplified model of the situation. Assume that there are two Afghan soldiers in the same unit. Each can stay and fight the Taliban or desert. If both stay and fight, they will win any battle against the Taliban, which each values at 100 utility. If either soldier deserts, the Taliban wins, which they each values at 0 utility. In addition, if only one soldier stays, that soldier will be killed by the Taliban, which he values at -1000 utility. In addition, the Taliban is offering a bounty to any soldier that deserts One soldier does not care about this and would not take the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following game: you and a partner on a school project are asked to evaluate the other, privately rating them either "1 (Good)" or "0 (Bad)". After all the ratings have been done, a bonus pot of $1000 is given to the person with the highest number of points. If there is a tie, the pool is split evenly. Both players only get utility from money. Mark all of the following true statements: A. The best response to your partner rating you as Good is to rate them as Good as well. Your answer B. There is no best response in this game. C. Your partner's best response to you rating them as Bad is to also rate you as C Bad. D. Your best response to any strategy of your partner is to play "Good".
Problem 1. Andy (consumer A) and Red (consumer B) growing old together on a remote island on which only fish (good 1) and coconut (good 2) are available for consumption. Both Andy and Red have Cobb-Douglas preferences. That is, consumer i has u(xi, z) = (a)¹/2 (1)¹/2, where x is consumer i' s good j consumption with j = 1, 2. Also, Andy's ini- tial endowment is w (w, w) (1,3) while Red's initial endowment is w = (wi, wz) = = = = (3, 1). (a) Draw the Edgeworth box for this economy. Mark the point indicating the initial endowment of each consumer. (b) Draw the contract curve for this economy in an Edgeworth box (a graphical represen- tation is sufficient). Explain if it is Pareto efficient for Andy and Red to consume their endowments. (c) What is the set of allocations that could be the outcome under barter in this economy? (d) Let the price of fish be p₁ while the price of coconut be normalized to 1 without loss of generality. For each consumer, solve the utility maximization problem,…
Ana and Ivan each individually and simultaneously decide whether to spend the evening at a play or a concert. Ana prefers to attend the concert twice as much without Ivan than to attend the play without him, and she prefers this three times more than being in the same place with Ivan (and at that point, she doesn't care where they are). Ivan prefers being in the same place with Ana twice as much as being at the play without her, and he prefers this four times more than being without Ana at the concert. Both have von Neumann-Morgenstern (vNM) preferences. With what probability will Ivan choose to attend the concert in Nashe's equilibrium?
Mohamed and Kate each pick an integer number between 1 and 3 (inclusive). They make their choices sequentially.Mohamed is the first player and Kate the second player. If they pick the same number each receives a payoff equal to the number they named. If they pick a different number, they get nothing. What is the SPE of the game? a. Mohamed chooses 3 and Kate is indifferent between 1, 2 and 3. b. Mohamed chooses 3 and Kate chooses 1 if Mohamed chooses 1, 2 if Mohamed chooses 2, and 3 if Mohamed chooses 3. c. Mohamed chooses 1 and Kate chooses 1 if Mohamed chooses 1, 2 if Mohamed chooses 2 and 3 if Mohamed chooses 3. d. Mohamed chooses 3 and Kate chooses 3.
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Subgame Perfect Equilibrium. Stephen J. Seagull must decide whether or not to start a new movie project. If he decides not to, he and Clod VandeCamp both get a utility of 10. If he decides to begin the project, both he and Clod must simultaneously decide who the director should be: George Spellbinder, or Ed Tree. If they disagree on the director, the movie isn't made, but both have wasted time, so they get only a utility of 0. If they agree on George Spellbinder, the movie will be a roaring success, and each gets a utility of 20. If they agree on Ed Tree, the movie will be terrible. and they will only get a utility of 5. (a). Draw the extensive form of this game. (b). Write down the normal form. (c). Find all Nash equilibria. (d). Apply the theory of iterated elimination of weakly dominated strategies and state its prediction. (e). Find all the subgame perfect equilibria.
You want to make a model showing how people decide to decorate their houses and lawns. You assume that homeowners follow the art idea of the "Golden Ratio" to decide where one item should be in relation to another. In reality, the homeowners have never heard of the "Golden Ratio," but the predictions made by your model are still very close to how things end up decorated. An economist would say your model O is not ideal due to the lack of realism O is effective as long as the homeowners learn to use the Golden Ratio in decorating as a result of your study is effective because economics focuses on predictions from models, not the assumptions used to create them O is not ideal because it does not look sufficiently like the real world
Suppose you observe a person's answer to two decision problems. Problem 1: You are offered $40 today. What is the minimum amount x you demand one month from today in order to be willing to give up the $40 now? Answer: x = 52. Problem 2: Your are offered $40 today. What is the minimum amount x you demand one year from today in order to be willing to give up the $40 now? Answer: $60. 1. Demonstrate that the rational model of time preferences is violated for this choice pattern. 2. Derive this individual's B and d for the hyperbolic time discounting model. 3. Suppose the utility you get from eating ice cream now is 10 utils. But you pay a cost of -4 utils per hour for the next 4 hours, because it gives you indigestion and makes you feel lethargic. If your hourly B and d for this problem are B = .6 and d = .9, ... 1. What is the total discounted utility of eating ice cream now? 2. What is your total discounted utility now of planning to eat ice cream after lunch tomorrow? 3. Do you eat ice…
We will loosely model the petrol crisis the UK has recently experienced as a game. Start with a two-player case. Assume that there are two people living on an island and each person has two actions: keep buying petrol as normal or rush to the petrol station and fill up the tank. When both players buy as normal, the petrol supply would be enough for the two, and hence no single player has any incentives to rush. In fact, when all players keep buying as normal, rushing unilaterally will incur a small cost (e.g. one has to give up their normal routine, go to the gas station with half full tanks etc.). If one player rushes, however, the other has incentives to do so too, for waiting when the other player rushes results in the worst outcome for the player who waits. Create a game using this scenario assuming that players decide simultaneously. Assign payoffs for all possible strategy combinations, carefully arguing and justifying why you assigned a particular payoff to a particular strategy…
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Boris and Leo are playing an ultimatum bargaining game, with £1000 to share. Boris is the proposer. Suppose Leo has the following preferences: his utility in monetary terms is the amount of money he gets minus 40 percent of Boris's amount Which of the following statements is/are correct? a) If Leo's preferences change so that his utility in monetary terms were the amount of money he gets minus 100 percent of Boris's amount, his minimum acceptable offer would increase. b) The minimum offer Leo will accept is larger than £250. c) The description of Leo's preferences suggest that Leo is altruistic.