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- Consider the following story: Charlie finds two fifty-pence pieces on the floor. His friend Dylan is standing next to him when he finds them. Chris can offer Dylan nothing at all, one of the fifty-pence pieces, or both. Dylan observes the offer made by Charlie, and can either accept the offer (in which case they each receive the split specified by Charlie) or reject the offer.If he rejects the offer, each player gets nothing at all (because Charlie is embarassed and throws the moneyaway).(a) Formulate this interaction as an extensive-form game. To keep things simple, players’ payoff is equal to their monetary gain.(b) List all histories of the game. Split these into terminal and non-terminal histories.(c) What are the strategies available to Charlie? What are the strategies available to Dylan? Draw the strategic-form game.(d) Find the pure-strategy Nash equilibria of this game.(e) What do you think will happen?Come up with a diagram (i.e. using a two-player decision matrix such as the Prisoner’s Dilemma) for an original game theory/prisoner's dilemma scenario (either in business, politics, or your own personal life), and explain what would be the most likely outcome of the scenario you have chosen.The following represents the potential outcomes of your first salary negotiation after graduation: Assuming this is a sequential move game with the employer moving first, indicate the most likely outcome. Does the ability to move first give the employer an advantage? If so, how? As the employee, is there anything you could do to realize a higher payoff?
- The game of chicken has Group of answer choices a first-mover advantage. a second-mover advantage. equal chances regardless of sequence. no application to economic decisions. advantages depending on the players.Every value in a payoff matrix represents: the gains and losses of decisions for each player regardless of the decisions of other players. the best possible outcomes of various players in a game. the gain or loss of a decision for each player given the decisions of other players. the worst possible outcomes of various players in a game.Player 1 is an Internet service provider and Player 2 is a potential customer. They consider entering into a contract of service for a period of time. The provider decides between two levels of service: High or Low. The potential customer decides whether to Buy or Not Buy. When the potential customer calls customer service, the Internet service provider makes the initial offer.The potential customer then decides whether to Buy or Not Buy. Let’s say that the interaction ends after the potential customer makes their decision. Please set up the extensive form according to the following outcomes: i. If the Internet service provider offers Low and the potential customer doesn’t buy, they both make off with 1. ii. If the Internet service provider offers Low and the potential customer buys, the Internet service provider makes off with 3, and the customer receives 0. iii. If the Internet service provider offers High and the potential customer doesn’t buy, the Internet service provider makes…
- A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. If only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with a value of either $39 or $104, with both values equally probable. Without a reserve price, the second highest bid will be the price paid by the winning bidder. The following table lists the four possible combinations of bidder values. Each combination is equally likely to occur. On the following table, indicate the price paid by the winning bidder with and without the stated reserve price. Bidder 1 Value Bidder 2 Value Probability Price Without Reserve? Price with $104 Reserve Price? ($) ($) ($) $39 $39 0.25 $39 $104 0.25 $104 $39 0.25 $104 $104 0.25 Without a reserve price, the expected price is…A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. If only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with a value of either $60 or $160, with both values equally probable. Without a reserve price, the second highest bid will be the price paid by the winning bidder. The following table lists the four possible combinations of bidder values. Each combination is equally likely to occur. On the following table, indicate the price paid by the winning bidder with and without the stated reserve price. Bidder 1 Value Bidder 2 Value Price Without Reserve ($) ($) ($) $60 $60 $60 $160 $160 $60 $160 $160 Probability 0.25 0.25 0.25 0.25 Without a reserve price, the expected price is $ expected price is larger_ the reserve price. Price with $160 Reserve Price With a reserve price of $160, the…When the payoffs are profits, the maximin strategy selects the alternative or act with the maximum gain. True or False True False
- One method of solving this problem is through signaling. Signaling is a strategy one uses when they have information. The goal is to use a signal to convince the buyer that the good or service that is being sold is quality and will meet the buyer's wants. Offer an example of a company that uses a signal to help sell its product. What is the signal? What information is the signal trying to convey? Do you think the signal is effective? Why or why not? Does this signal improve market efficiency? Why or why not?Considering the given pay off matrix, what does player A prefers: Player B Player A I 11 Second strategy Keep quiet. Mixed strategy First strategy I -7 -10 || 6 8We have a group of three friends: Kramer, Jerry and Elaine. Kramer has a $10 banknote that he will auction off, and Jerry and Elaine will be bidding for it. Jerry and Elaine have to submit their bids to Kramer privately, both at the same time. We assume that both Jerry and Elaine only have $2 that day, and the available strategies to each one of them are to bid either$0, $1 or $2. Whoever places the highest bid, wins the $10 banknote. In case of a tie (that is, if Jerry and Elaine submit the same bid), each one of them gets $5. Regardless of who wins the auction, each bidder has to pay to Kramer whatever he or she bid. Does Jerry have any strictly dominant strategy? Does Elaine?
