Alice and Julia want to spend time together but have different preferences for their activities. They can choose between two options: going to a soccer game or watching a football game. Alice prefers football and Julia prefers the football game, but they both prefer being together over being apart. If they both choose to attend a soccer game then Julia receives a payoff of 2 and Alice a payoff of 1. If they both choose to attend a football game, then Julia receive a payoff of 1 and Alice a payoff of 2. If one chooses a football game and the other a soccer game then they both receive a payoff of 0. The payout matrix below illustrates these payoffs. Which of the following statements are true: I. There is a dominant strategy II. A nash equilibrium exists where Alice attends a football game and Julia attends a soccer game III. A nash equilibrium exists where both friends attend a soccer game IV. Both attending a football game is a stable outcome. Alice Soccer Football Julia Soccer 2, 1 0,0 Football 0,0 1,2 O III and IV OI and II Oll only O I, II, III, and IV

Alice and Julia want to spend time together but have different preferences for their activities. They can choose between two options: going to a soccer game or watching a football game. Alice prefers football and Julia prefers the football game, but they both prefer being together over being apart. If they both choose to attend a soccer game then Julia receives a payoff of 2 and Alice a payoff of 1. If they both choose to attend a football game, then Julia receive a payoff of 1 and Alice a payoff of 2. If one chooses a football game and the other a soccer game then they both receive a payoff of 0. The payout matrix below illustrates these payoffs. Which of the following statements are true: I. There is a dominant strategy II. A nash equilibrium exists where Alice attends a football game and Julia attends a soccer game III. A nash equilibrium exists where both friends attend a soccer game IV. Both attending a football game is a stable outcome. Alice Soccer Football Julia Soccer 2, 1 0,0 Football 0,0 1,2 O III and IV OI and II Oll only O I, II, III, and IV

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consider the following game - one card is dealt to player 1 ( the sender) from a standard deck of playing cards. The card may either be red (heart or diamond) or black (spades or clubs). Player 1 observes her card, but player 2 (the receiver) does not - Player 1 decides to Play (P) or Not Play (N). If player 1 chooses not to play, then the game ends and the player receives -1 and player 2 receives 1. - If player 1 chooses to play, then player 2 observes this decision (but not the card) and chooses to Continue (C) or Quit (Q). If player 2 chooses Q, player 1 earns a payoff of 1 and player 2 a payoff of -1 regardless of player 1's card - If player 2 chooses continue, player 1 reveals her card. If the card is red, player 1 receives a payoff of 3 and player 2 a payoff of -3. If the card is black, player 1 receives a payoff of 2 and player 2 a payoff of -1 a. Draw the extensive form game b. Draw the Bayesian form game
Player 1 can stay at home or fly to New York, in which case Player 2 can meet Player 1, who can then buy a drink for Player 2. See the game below. Which of the following completely describes a possible strategy for Player 1? 1 Fly to New York Stay home Stay home Stay home and Don't buy drink Fly to New York and Meet Stay home or Fly to New York 2 Meet Don't meet 0,0 1 Buy drink Don't buy drink -2,0 1,2 -1, -1
Question 2. Two students are working together to submit their Microeconomics mid-semester group coursework. Each student i can put in the effort x; that costs c(x;), in which x; E [0, 1]. This gives each student the utility of u(x1, x2). Formu- late this situation as a strategic game.
Brian and Matt own the only two bicycle repair shops in town. Each must choose between a low price for repair work and a high price. The yearly economic profits from each strategy are indicated in Figure bellow. The upper right side of each rectangle shows Brian's profits; the lower left side shows Matt's profits. Matt's Actions Low Price High Price Low Price Brian's Actions $1,500 $1,500 $200 $3,000 High Price $5,000 $200 $4,000 $4,000 Which of the following statements is correct for a one-trial game? The market equilibrium price is the low price. A market equilibrium price cannot be established unless Brian and Matt collude. A market equilibrium price cannot be established unless Brian or Matt engages in tit-for-tat strategy. A market equilibrium price cannot be established without repeated trials. The market equilibrium price is the high price.
Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 6 units of utility, while the small rival suffers a loss of utility of 2. If the two companies select the same technology, Microsoft suffers a loss of utility of 2 while the rival gains 2 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Rival Technology A Rival: , Microsoft Rival: , Microsoft Technology B Rival: , Microsoft Rival: , Microsoft True or False: There is no equilibrium in pure strategies. True False Note:- Do not provide handwritten…
two timber companies, Alpha and Beta, have to decide whether to harvest timber from the North Hill or the South Hill and then sell the timbers in the same market. If both harvest from North Hill, each company can harvest 100 tons of timber. If both companies harvest from South Hill, each company can harvest 150 tons of timber. If one company harvests from North Hill and the other harvests from South Hill, the company at North Hill can harvest 150 tons of timber while the company at South Hill can harvest 250 tons of timber. The price of timber is dependent on the total supply of timber in the market. The price will be $180 per ton if the total supply is 200 tons, $150 per ton if the total supply is 300 tons and $100 per ton if the total supply is 400 tons. To both companies, the cost of harvesting in North Hill is $5,000 and the cost of harvesting in South Hill is $10,000. (a) If Alpha and Beta were to make a decision simultaneously, construct the payoff matrix in terms of profit for…
Consider the following bargaining game with three rounds: Players 1 and 2 divide a pie of size 1. Both players have a common discount factor, δ = 0.9. In the first round (player 1 proposes): player 1 proposes x ∈ [0, 1]. If player 2 accepts the offer, then player 1 gets x, and player 2 gets 1−x. If player 2 rejects the offer, the game proceeds to round 2. In the second round (player 2 proposes): player 2 proposes y ∈ [0, 1]. If player 1 accepts the offer, then player 1 gets δy, and player 2 gets δ − δy. If player 2 rejects the offer, the game proceeds to round 3, the final round. In the third and final round (player 1 proposes): player 1 proposes z ∈ [0, 1]. If player 2 accepts the offer, player 1 gets δ2z, and player 2 gets δ2 − δ2z. If player 2 rejects the offer, everyone gets 0. 1. What would be the SPNE of the game?
7
Use the scenario below to answer the question. Chocolate raisin protein bars are Duc’s favorite dessert. A local bakery sells them for $1.00 each. Duc buys one and eats it at the bakery. Duc decides that he wants another one, but is not willing to pay full price. He knows the owner of the bakery and wants to negotiate. He offers to buy two more protein bars at $0.75 each. He plans to eat one at the store and anther one later. The bakery owner agrees to the deals. What is the total utility of Duc’s decision? 00 75 50 00
There is a city, which looks like chopped isosceles triangle, as shown below. Citizens live uniformly distributed all over the city. Two ice-cream vendors, A and B, must independently set up stores in the city. Each citizen buys from the vendor closest to their location and when equidistant from both vendors they choose by coin toss. Each vendor’s aim is to maximize the expected number of customers. A choice of location by the two vendors is a Nash equilibrium if no vendor can do better by deviating unilaterally. Does this game have a Nash equilibrium? If so, describe it. If not, explain why not
Answer as many parts as you can
Problem 1. Alice and Bob sell used CDs at music festivals. Each is deciding whether or not to set up their booth at the last festival of the summer. The festival is scheduled to take place in Alton, very near where Alice lives. It will cost her only $30 to travel the festival. Bob is farther away, and it will cost her $100 to travel to Alton. Both Alice and Bob would prefer to be only CD sellers at the festival, since they would avoid competition. If only one seller is at the festival, she will make $150 during the day (not counting travel costs). If both Bob and Alice sell CDs at the festival, they will lower their prices and each make $50 during the day. Both Alice and Bob receive $0 for not attending the festival. 1. Draw the Normal Form of the game Alice and Bob are playing, be sure to label the game completely. 2. Does either player have a dominant strategy? If so, what is it? 3. List all pure strategy Nash equilibria for this game. Remember that a Nash equilibrium is a strategy…