Answered: Consider a firm and a worker…

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 a firm and a worker interacting in the market product (m) and the worker knows her/his outside opt workers simultaneously demands a wage wL. The wor gets a wage w3(wF+wL)/2. If wF<wL, worker does not worker is hired, 0 otherwise. The worker's payoff of w are identically and independently drawn from a unifor This game can be modelled as a double auction.

In a li Select one or more:

a. The wage demand by the worker is a linear function

b. The strategy of the firm is a linear function v.

C. The wage offer by the firm is a linear function of m.

d. The strategy of the players are linear functions of the (Game - Theory) This is MCQI just need one correct option URGENT

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

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