EntrantInOutIncumbentAc commodateFightEntrant(5,5)(0, 10)StayWithdraw(-5,-5)(-1,8)True or False: The equilibrium for this game is (In, Fight, Stay}.O TrueO False Consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm. If the entrant doesnot enter ("Out"), the incumbent firm earms a payoff of 10, while the entrant earns a payoff of 0. If the entrant enters ("In"), then the incumbent caneither accommodate or fight. If the incumbent accommodates, both eamn a payoff of 5. If the incumbent fights, then the entrant can either leave theindustry ("Withdraw") or remain in it ("Stay"). If the entrant stays, both earn a payoff of -5. If the entrant withdraws, the entrant earns a payoff of -1, and the incumbent earms a payoff of 8. The extensive form of the game is depicted in the following figure, where the payoffs are of the form(Entrant Payoff, Incumbent Payoff).EntrantInOutIncumbentAccommodateFightO Entrant(5,5)(0,10)StayWithdraw(-5,-5)(-1,8)

The game has two players, entrant and incumbent. Where both players have the perfect information.

Answered: Entrant In Out Incumbent Accommodate…

Entrant In Out Incumbent Accommodate Fight Entrant (5,5) (0,10) Stay Withdraw (-5,-5) (-1,8) True or False: The equilibrium for this game is (In, Fight, Stay}. O True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Entrant
In
Out
Incumbent
Ac commodate
Fight
Entrant
(5,5)
(0, 10)
Stay
Withdraw
(-5,-5)
(-1,8)
True or False: The equilibrium for this game is (In, Fight, Stay}.
O True
O False

Consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm. If the entrant does
not enter ("Out"), the incumbent firm earms a payoff of 10, while the entrant earns a payoff of 0. If the entrant enters ("In"), then the incumbent can
either accommodate or fight. If the incumbent accommodates, both eamn a payoff of 5. If the incumbent fights, then the entrant can either leave the
industry ("Withdraw") or remain in it ("Stay"). If the entrant stays, both earn a payoff of -5. If the entrant withdraws, the entrant earns a payoff of -
1, and the incumbent earms a payoff of 8. The extensive form of the game is depicted in the following figure, where the payoffs are of the form
(Entrant Payoff, Incumbent Payoff).
Entrant
In
Out
Incumbent
Accommodate
Fight
O Entrant
(5,5)
(0,10)
Stay
Withdraw
(-5,-5)
(-1,8)

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