Answered: Find a Nash equilibrium using back-…

Business

Economics

Find a Nash equilibrium using back- ward induction for the following tree: 56 14 3 1:2 1: 07 45 2:1 20 2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Consider the following extensive form of the game. The outcome in the subgame perfect Nash…

Q: Consider the following NFG: X A (a,b) B (1/2a, 2b) (2a, b) Y (1/2a, 2b) Assume that a > 0,b>0. Which…

A: Let us assume that player 1 chooses strategy A with probability p and strategy B with probability…

Q: Consider the game in the table below. Does Firm A have a strictly dominant strategy? Enter 111 for…

A: Given, Firm A Firm B Left Right Up 7,5 9,14 Down 3,14 7,9

Q: Consider a Cournot duopoly model, where two firms compete by providing identical goods. The demand…

A: Firm 2 has 2 marginal cost where mC=2 is low marginal cost and mC=4 is the high marginal cost. This…

Q: To find the firm’s profits from the sales figures, assume that the price is $30, that the marginal…

A: Apple / Google Advertise Don't Advertise 700, 700 900, 600 Don't 600, 900 800, 800

Q: collude price and a cheat price. Answer the following questions in order. (a) Does Firm A have a…

A: (a) Yes Firm A does have dominant strategy the reason being on both the cases whether firm B opt to…

Q: Consider a market with two identical firms, Firm A and Firm B. The market demand is: 1 P = 100 –Q…

A: Since you have asked a question with multiple subparts, we answer the first three for you. If you…

Q: Consider a market with two identical firms, Firm A and Firm B. The market demand is: P = 100 –Q…

A: In the oligopoly market structure, the decision of one firm is dependent on the decision of another…

Q: Consider the Bertrand Game with homogeneous firms. The game which is identical to that one except…

A: The Nash equilibrium is a decision-making theorem within game theory that states a player can…

Q: Consider this "all-pay" auction in which the highest bidder wins and both bidders must pay an amount…

A: Nash equilibrium considers the best response strategy of a player, considering the decision that the…

Q: It takes 3,000 households having average annual income of $50,000 within a 3-mile radius to support…

A: Nash equilibrium is achieved when no participant of the game desires to change their strategy even…

Q: Consider the following normal-form (matrix-form) game: Player 2 L M R 5,2 3,5 8,4 6,2 2,3 9,8 1,4…

A: We have 3×3 game, were both players have 3 actions

Q: Consider this "all-pay" auction in which the highest bidder wins and both bidders must pay an amount…

A: Nash equilibrium considers the best response strategy of a player, considering the decision that the…

Q: Economics - Game Theory & Business Strategy Inverse Market Demand for tires is P = 200 - .01Q We…

A: The extensive form of the game is, 1.Manufacturer sets Price X by solving: maxQ(100-0.01Q)Q-10Q 2.…

Q: The given matrices are payoffs for two-person, zero sum games. Decide whether the games are strictly…

A: -3 -5 2 -1

Q: A total of n ≥ 2 companies are considering entry into a new market. The cost of entry is 30. If only…

A: Concept When market actors have strategic actions to take and their payout is reliant on the…

Q: It is the price that each firm will set according to the Nash equilibrium of the simultaneous game:…

A: Given that two firms sell the same good.Firms compete in prices let it be p1 and p2.Marginal cost of…

Q: Consider the following normal-form (matrix-form) game: Player 2 M R 5,2 3,5 8,4 9,8 T Player 1 M6,2…

A: Game theory refers to the concept that shows how 2 rational players choose strategies that maximize…

Q: A general form of "the Battle of the Sexes" can be represented by the following figure. Husband…

A: (a) If the husband chooses battle and wife will choose ballet as pay-off. If the husband chooses…

Q: Suppose that two firms produce mountain spring water and the market demand for mountain spring water…

A: A firm maximizes its profit by producing at the output level where MC equals MR

Q: Consider a first-price sealed-bid auction of a single object with two bidders j = 1, 2. Bidder 1' s…

A: V1=2, V2=5 Two bidders so the probability will be 1/2 for each to win the bid. If 1st bidder wins…

Q: vertical mergers, assume two firms work together to produce a product. Firm 1 has an investment…

A: Introduction Two firms work together to produce a product. a) Investment level of firm 1 = i1…

Q: Consider the following normal form representation of the standard competition between firm A and…

A: Nash equilibrium is such an equilibrium from where no player has any incentive to change its…

Q: Consider a market with two identical firms, Firm A and Firm B. The market demand is: P = 100 –Q…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Find the Nash equilibrium outcome for both treatments of the multi-stage bargaining game. In the…

A: Nash equilibrium is a concept in game theory that states that the best outcome of a game is one in…

Q: Refer to the table below to answer the following questions. Table 14.2.10 Fim A Comply A $im Cheat A…

A: We are going to find the Strictly/Weakly dominant strategy and Pareto efficient outcome.

Q: Consider the infinitely repeated game constructed from the following stage game. b1 b2 a1 10,10 4,24…

A: In game theory, the Nash equilibrium is the equilibrium outcome of the game and the players gain no…

Q: Consider a market in which there are two firms: A and B. Each firm produces a differentiated product…

A: Firm B Price 60 70 Firm A Price 60 (2700,2700) (3375,2475) 70 (2475,3375)…

Q: Two people play the following game infinitely. If Player 1 uses a grim trigger strategy, how high…

A: Grim Trigger Strategy is a strategy which may be adopted in case of infinitely repeated games. This…

Q: Suppose that there are two firms producing a homogenous product and competing in Cournot fashion and…

A: In Cournot duopoly two firms compete in terms of quantity and charge a common price. Each firm…

Q: Amazon faces the other group (Other), which consists of e-book manufacturers other than Amazon, in a…

A: Nash equilibrium refers to the situation when the parties involved in the game being played play or…

Q: The market demand function is Q=10,000-1,000p. Each firm has a marginal cost of m=$0.28. Firm 1,…

A: Cournot's oligopoly model assumes that competitors make the same product and that everyone tries to…

Q: Consider the game in the table below. Is the Nash Equilibrium efficient? Enter 111 for YES and 222…

A: In a game theory, a nash equilibrium will be considered as an efficient if both the players have no…

Q: Consider two firms choosing quantities sequentially in a duopoly setting (i.e. the Stackelberg…

A: An oligopoly market is characterized by a small number of firms dominating the market. A duopoly is…

Q: Suppose two firms compete as Cournot Oligopolists. The profit functions of these two firms are IT =…

A: Given Information: Profit =Total Revenue -Total Cost Profit= P*Q -TC Using the given profit…

Q: Two firms sell an identical product in a market by setting prices simultaneously. Consumers buy from…

A: Nash Equilibrium is the starategy from which no player has the incentive to deviate from chosen…

Q: 14. Company A and Company B are each telecommunications manufacturers. Both companies manufacture…

A: As per the guidelines answer is given to the first question i.e. Q14. Answer 14) "A nash equilibrium…

Q: Using your own words, explain how the concept of elimination of dominated strategies differs from…

A: Elimination of dominated strategy means, in a game, if the players are rational; they should not…

Q: Consider the stage game below. Can we get (A,Y) played each date in an infinitely repeated game?…

A: The handwritten solution is attached below:

Q: Suppose a town only has two petrol stations, United and BP. Each could choose to charge a high price…

A: An oligopoly is a market structure where a small number of firms dominate the market. The existance…

Question

Find a Nash equilibrium using back-
ward induction for the following tree:
56
•14
3.
1
2:2
•38
1:2
1
1:
0 7
45
1
2:1
20

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The principle of a Nash Equilibrium can be summarized as "Structure the law so as to remove the impediments to private agreements". True False
Consider the following game: 1,2 L M R U 8,4 3,4 5,2 M 8,8 2,3 6,2 D 9, k 0,1 1,1 Which statement is true? (D, L) is a Nash equilibrium for k > 0. (D, L) is Pareto efficient if k > 2. (D, L) is the only Pareto efficient outcome of the game. There are at least three Pareto efficient outcomes for k > 2. There is no mixed strategy Nash equilibrium of this game
Consider a duopoly market, where two firms sell differentiated prod- ucts, which are imperfect substitutes. The market can be modelled as a static price competition game, similar to a linear city model. The two firms choose prices pi and p2 simultaneously. The derived demand functions for the two firms are: D1 (p1, P2) and D2 (p1, P2) = + 2, where S > 0 and the parameter t > 0 을 + S + P2-P1 2t 2t measures the degree of product differentiation. Both firms have constant marginal cost c > 0 for production. (a) Derive the Nash equilibrium of this game, including the prices, outputs and profits of the two firms.
q60c- Is the Nash equilibrium the best outcome for this problem? Explain
QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)
Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m) Giga Company Titanic Conglomerate No Change Refurbishment of existing stores Large Expansion No Change 30, 40 25, 35 15, 24 Refurbishment of existing stores 35, 30 28, 32 18, 33 Large Expansion 12, 22 18, 20 20, 25 The Nash equilibrium: (A) does not exist. (B) occurs when both firms choose Refurbishment of existing stores. (C) occurs when both firms choose Large Expansion. (D) occurs when both firms choose No Change.
Problem 3. Consider the following game with three firms. First, firms 1 and 2 si- multancously choose quantities q1 and q2 respectively. After observing firm 1 and 2's quantities, firm 3 chooses its quantity q3. There is no production cost and the inverse demand function is p= 12 – (91 +2 + 93). (a) Compute the SPNE of this game. (b) Give an example of Nash equilibrium s* with s = 4 and s, = 6 , that is not subgame perfect. game theory question
It takes 3,000 households having average annual income of $50,000 within a 3-mile radius to support a grocerystore. There are actually 6,000 households within 3-miles of the Shop-Rite Grocery that have $50,000 per yearaverage incomes. Today, Shop-Rite is the only grocery store in this area. Using the concept of Nash Equilibrium inlocation, explain what the likely outcome will be for this area, given those conditions
12.3. Return to the example used in the text for the Cournot model, where demand was equal to ar Q3D 120 — Р. а. Suppose that instead of costless production, marginal and average costs are constant at МС — АС — 30. Compute the Nash equilibrium quantities, prices, and profits.
Consider the game R T 11 1.0 10 M 014.0 0.1 B 0.10. 4.0 (a) Find the Nash equilibrium in pure strategies. (b) Find the Nash equilibrium in completely mixed strategies. (c) Find the Nash equilibrium in partially mixed strategies ove the support {A. B} x {C.R).
where is the nash equilibrium? find out the dominant strategy. it was discovered that two domestic manufacturing companies were fixing prices. if each company is silent, there is no penalty, but production and business are disrupted due to continuous investigation by the Fair Trade Commission. The penalty for revealing the estimated loss due to the investigation and collusion is as follows: Firm 2 Silence Disclosure Silence -200, -200 -590, 0 Firm 1 Disclosure 0, -590 -450, -450 fine( a hundred million won)
There are two energy suppliers, Origin and Globird, and each has two possible actions: to introduce (I) or to not introduce (N) a new plan. Origin is the first firm to make a decision, and Globird is next. The extensive "tree" form of the game, and the payoffs of the two firms, are given below. Globird Origin (175,75) (25,100) Globird (50,200) (75,100) Find the subgame perfect Nash equilibria (SPNE) of this game.