Imagine two drivers playing chicken, a game where they drive towards one anotherwith their cars. Each driver has two actions: go straight or turn left. For simplicity, westandardize directions according to the perspective of an overhead observer. Thus, ifboth drivers select the same action, they will crash. At the same time, each driver wantsto go straight, to seem tough and fearless. Utilities are given by the following table:Utility Turn Left Straight Turn Left -20, -20 - 5, 10 Straight 10, -5 -10, -10 These are inthe format (row player, column player) 1. Does either player have a dominatingstrategy? If so, identify all of them. 2. What are the pure strategy Nash equilibria of thisgame? 3. Does the game have any mixed strategy Nash equilibria? If yes, compute allof them.

Dominating Strategies:A dominating strategy is one that always gives a player a higher payoff,…

Answered: Imagine two drivers playing chicken, a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Nicolaus I Bernoulli offers his friend Pierre Rémond de Montmort a game where they need to repeatedly toss a fair ducat until they get a head for the first time. The game stops then, and they count the number n of coin tosses it took to get the desired outcome, and Montmort gets 2^n ducats. Assume that Montmort's utility function is u(w)=w^0.14. How much should Montmort pay to play this game?
Arif and Aisha agree to meet for a date at a local dance club next week. In their enthusiasm, they forget to agree which venue will be the site of their meeting. Luckily the town has only two dancing venues, Palms and Oasis. Having discussed their tastes in dancing venues last week, both know that Arif prefers Palms to the Oasis and Aisha prefers the Oasis to Palms. In fact, their payoffs reflect that if both go to Oasis, Aisha’s utility is 3 and Arif’s 2, while if both go to Palms Arif’s utility is 3 and Aisha’s is 2. If they do not go to the same venue, then they both have a utility of 0. (a) Write the payoff matrix and explain whether there are any pure Nash equilibria. Carefully explain what these are and why. Comment on the existence of any dominant strategy equilibria. (b) Please calculate mixed strategy equilibria, if any, and then derive the probability that Arif and Aisha will find themselves at the same venue. Carefully explain the steps to your solution; a numerical…
Two friends are deciding where to go for dinner. There are three choices, which we label A, B, and C. Max prefers A to B to C. Sally prefers B to A to C. To decide which restaurant to go to, the friends adopt the following procedure: First, Max eliminates one of three choices. Then, Sally decides among the two remaining choices. Thus, Max has three strategies (eliminate A, eliminate B, and eliminate C). For each of those strategies, Sally has two choices (choose among the two remaining). a.Write down the extensive form (game tree) to represent this game. b.If Max acts non-strategically, and makes a decision in the first period to eliminate his least desirable choice, what will the final decision be? c.What is the subgame-perfect equilibrium of the above game? d. Does your answer in b. differ from your answer in c.? Explain why or why not. Only typed Answer
Frank and Nancy met at a sorority sock hop. They agreed to meet for a date at a local bar the next week. Regrettably, they were so fraught with passion that they forgot to agree on which bar would be the site of their rendezvous. Luckily, the town has only two bars, Rizotti's and the Oasis. Having discussed their tastes in bars at the sock hop, both are aware that Frank prefers Rizotti's to the Oasis and Nancy prefer the Oasis to Rizotti's. In fact, the payoffs are as follows. If both go to the Oasis, Nancy's utility is 3 and Frank's utility is 2. If both go to Rizotti's, Frank's utility is 3 and Nancy's utility is 2. If they don't both go to the same bar, both have a utility of 0. There are two Nash equilibrium in pure strategies and a Nash equilibrium in mixed strategies where the probability that Frank and Nancy go to the same bar is 12/25. This game has two Nash equilibria in pure strategies and a Nash equilibrium in mixed strategies where each person has a probability of 1/2 of…
Q3. Two ice cream trucks operate on a beach and play a simultaneous pricing game. If one of them prices low and the other high it gets all the customers and a pay off of 12 while the other gets zero. If both price high each gets 6, and if both price low each get 5. The best strategy is for both to price high. True/False/Uncertain. Explain.
Question 2. Two students are working together to submit their Microeconomics mid-semester group coursework. Each student i can put in the effort x; that costs c(x;), in which x; E [0, 1]. This gives each student the utility of u(x1, x2). Formu- late this situation as a strategic game.
Maipo and Pisco need to decide how to divide a cake between the two of them. Both like cake and want to get as much cake as they can. They decide to let Maipo cut the cake first and then Pisco gets to pick which piece he wants. For simplicity, assume that Maipo can only cut the cake in two ways: He can either divide it into two pieces that are equal size (i.e., both will get half the cake) or he can divide the cake into two pieces where one piece is twice the size of the other (i.e., one will get a piece that is two-thirds of the cake and the other will get a piece that is one-third of the cake). a. Set up this game as a sequential game and draw the game tree that represents it Note: You can either draw the game tree by hand and then photograph/scan the tree and paste it into the assignment or use the drawing tool in Word to draw the tree. b. Find the sub-game perfect Nash Equilibria to this game. Underline the strategies or highlight the game tree path to show what the Nash Equilibria…
which is the nash equilibrium? small pig does press large pig does press (20, 130), small pig doesn't press large pig does press (140, 10), small pig does press large pig doesn't press (-5, 150), small pig does not press large pig doesn't press (0,0).
7
Use the scenario below to answer the question. Chocolate raisin protein bars are Duc’s favorite dessert. A local bakery sells them for $1.00 each. Duc buys one and eats it at the bakery. Duc decides that he wants another one, but is not willing to pay full price. He knows the owner of the bakery and wants to negotiate. He offers to buy two more protein bars at $0.75 each. He plans to eat one at the store and anther one later. The bakery owner agrees to the deals. What is the total utility of Duc’s decision? 00 75 50 00
Two supermarkets face the following possibilities. Superstore Advertise Don’t Advertise Megastore Advertise $95, $80 $305, $55 Don’t Advertise $65, $285 $165, $115 47. A Nash equilibrium is Group of answer choices for Megastore to advertise and for Superstore to advertise. for Megastore to advertise and for Superstore not to advertise for Megastore not to advertise and for Superstore to advertise. for Megastore not to advertise and for Superstore not to advertise. There is no Nas equilibrium in this rivalry game.

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS