Assume that the two universities in USA (UA and UAA) are competing with one another to attract top students to join their PhD programs. To attract the best students, university management offers scholarships so that students will choose to further their studies at their universities. Assuming that there are two types of scholarship packages offered: Premier Scholarships (which is more attractive but costs more to the university) and Basic Scholarships. If both universities offers the same scholarship package, they will divide the number of students in a 50%-50% ratio. If one of the university offers the Premier Scholarship and the other university offers the Basic Scholarship, the university that offers the Premier Scholarship will attract 80% of the top students. [Note: Assume that the payoff to the university is in the form: (% of top students to UA; % top students to UAA]. (a) What is the Nash equilibrium for this game? Provide a brief explanation. (b) Is there an incentive for both universities to collude? Provide a brief explanation.

Assume that the two universities in USA (UA and UAA) are competing with one another to attract top students to join their PhD programs. To attract the best students, university management offers scholarships so that students will choose to further their studies at their universities. Assuming that there are two types of scholarship packages offered: Premier Scholarships (which is more attractive but costs more to the university) and Basic Scholarships. If both universities offers the same scholarship package, they will divide the number of students in a 50%-50% ratio. If one of the university offers the Premier Scholarship and the other university offers the Basic Scholarship, the university that offers the Premier Scholarship will attract 80% of the top students. [Note: Assume that the payoff to the university is in the form: (% of top students to UA; % top students to UAA]. (a) What is the Nash equilibrium for this game? Provide a brief explanation. (b) Is there an incentive for both universities to collude? Provide a brief explanation.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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MICROECONOMICS

Assume that the two universities in USA (UA and UAA) are competing with one another to
attract top students to join their PhD programs. To attract the best students, university
management offers scholarships so that students will choose to further their studies at their
universities. Assuming that there are two types of scholarship packages offered: Premier
Scholarships (which is more attractive but costs more to the university) and Basic Scholarships.
If both universities offers the same scholarship package, they will divide the number of students
in a 50%-50% ratio. If one of the university offers the Premier Scholarship and the other
university offers the Basic Scholarship, the university that offers the Premier Scholarship will
attract 80% of the top students. [Note: Assume that the payoff to the university is in the form: (% of top
students to UA; % top students to UAA].
(a) What is the Nash equilibrium for this game? Provide a brief explanation.
(b) Is there an incentive for both universities to collude? Provide a brief explanation.

Study of decisions made by households and business firms at an individual level. It includes several laws and theorems related to demand, supply, production, allocation of resources, and prices.

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