Consider the game in the figure at right about funding and construction of adam to protect a 1,000-person town. Contributions to the dam fund,once made, cannot be recovered, and all citizens must contribute $1,000 tothe dam in order for it to be built. The dam, if built, is worth $70,000 to eachcitizen.In this game, the strategy pair that paysOA. $0 to each player is the only equilibrium.B. ($0, $1,000) is the only equilibrium.C. $69,000 to each player is the only equilibrium.O D. (-$1,000, $0) is the only equilibrium.OE.$69,000 to each player and the strategy pair that pays $0 to eachplayer are equilibria.Contribute toDamOne CitizenContribute to Don't ContributeDamto DamOther 1 tizens$69K, $69K-$1,000, $0ADon'texmark ute $0, - $1,000$0, $0Lining: 01:09:17Next

An equilibrium in a game is a situation in which no player can improve their payoff by changing…

Consider the game in the figure at right about funding and construction of a dam to protect a 1,000-person town. Contributions to the dam fund, once made, cannot be recovered, and all citizens must contribute $1,000 to the dam in order for it to be built. The dam, if built, is worth $70,000 to each citizen. In this game, the strategy pair that pays

Consider the game in the figure at right about funding and construction of a dam to protect a 1,000-person town. Contributions to the dam fund, once made, cannot be recovered, and all citizens must contribute $1,000 to the dam in order for it to be built. The dam, if built, is worth $70,000 to each citizen. In this game, the strategy pair that pays

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
Two discount stores (Megastore and Superstore) are interested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both stores with and without advertising. Superstore - Advertise Superstore - Don't Advertise Megastore - Advertise $95, $80 $305, $55 Megastore - Don't Advertise $65, $285 $165, $115 When the game does reach Nash Equilibrium, the payoffs for both stores will be a) Megastore $95 and Superstore $80 b) Megastore $305 and Superstore $55 c) Megastore $65 and Superstore $285 d) Megastore $165 and Superstore $115
8.8
Once again, two ice cream truck vendors, A and B, are playing a simultaneous pricing game. If only one of the vendors prices low, he gets all the customers for a payoff of 12, while the other vendor gets no customers and a payoff of zero. If both vendors price high, they each get a payoff of 6. If both price low, they each get a payoff of 5. Suppose that the above game is repeated indefinitely, and together the vendors adopt a trigger strategy such that they would start charging the low price only if the other vendor charged a low price last time. Provided that the vendors stick to their new strategy, what would be the Nash equilibrium going forward? a) Both the vendors price high b) Both the vendors price low c) Vendor A prices high, vendor B prices low d) Vendor B prices high, vendor A prices low
Jane is interested in buying a car from a used car dealer. Her maximum willingness to pay for thecar is 12 ($12,000). Bo, the dealer, is willing to sell the car as long as he receives at least 9($9,000). What is the Nash bargaining solution to this game?
Olivia is thinking about opening a new bakery (the entrant). There is already a bakery open in her neighborhood (the incumbent), and the owner of the incumbent bakery makes it clear that if Olivia enters the market, they will cut their prices in an attempt to drive the new bakery out of business. Based on the payoff matrix below, is the incumbent’s threat credible? That is, if Olivia opens a new bakery, will the incumbent actually lower their prices? Note: the entrant chooses the row, the incumbent chooses the column High price Low price Enter 1, 2 -1, 1 Don’t enter 0, 10 0, 1 a. Yes, the threat is credible b. No, the threat is not credible
John and Paul are walking in the woods one day when suddenly an angry bear emerges from the underbrush. They each can do one of two things: run away or stand and fight. If one of them runs away and the other fights, then the one who ran will get away unharmed (payoff of 0) while the one who fights will be killed (payoff -200). If they both run, then the bear will chase down one of them and eat them to death but the other one will get away unharmed. Assuming they don't know which one will escape we will call this a payoff of -100 for both. If they BOTH fight, then they will successfully drive off the bear but they may be injured in the process (payoff -20). Construct a payoff matrix for this game and identify the pure strategy Nash equilibrium. (Indicate it with words not with a circle!)
There are two oil producers, Saudi Arabia and Iran (these are countries which we are treating as players in this example). The market price will be $60/barrel if the total volume of sales is 9 million barrels daily, $50 if the total volume of sales is 11 million barrels daily, and $35 if the total volume of sales is 13 million barrels daily. Saudi Arabia has two strategies; either produce 8 million barrels daily or 6 million. Iran has two strategies; either produce 3 million barrels daily or 5 million. Assume for simplicity that marginal cost of production is zero for both countries. Here is the normal form representation of this game (where Saudi Arabia and Iran are players, they can choose strategies over what quantity to produce and they face payoffs in terms of profits). Note that the following paragraph is simply an explanation of this representation of the game. If you are already comfortable with the structure, feel free to skip to the questions below the horizontal line…
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
Consider the following 3-player static game with row player Batman (his choices are a and b), column player Catwoman (her choices are c and d), and matrix player Joker (his choices are left, middle and right). In the payoff triples the first entry is Batman's payoff, the second entry is Catwoman's payoff, and the third entry is Joker's payoff. left middle right d d d a 1,1,5 1,0,1 a 1,1,3 1,0,0 a 1,1,0 1,0,0 0,0,0 0,1,0 0,0,0 0,1,3 b 0,0,0 0,1,5 (a) Give a belief for Joker about his opponents' choice combinations that supports his choice of middle (i.e. such that middle is optimal for him). (b) Solve the game with iterated strict dominance. (c) Construct an epistemic model such that, for every choice found in (b) there exists a type such that: • the choice is optimal for the type, • and the type expresses common belief in rationality.