Is there a Nash Equilibrium for this game? If so, what is it?O The Nash Equilibrium is for both first to choose the high price.O The Nash Equilibrium is for both first to choose the low price.O The Nash Equilibrium is for Chevron to choose the high price while Shell chooses the low price.O The Nash Equilibrium is for Shell to choose the high price while Chevron chooses the low price.O There is no Nash Equilibrium for this game. A small town has only two gas stations, Chevron and Shell. Daily, each station mustsimultaneously display their prices, choosing between a high price and low price. Assumeboth firms know their potential payoffs and this is a one-time game (both firms are onlyinterested in today's profit). The payoff matrix for this game, showing potential dailyprofit, is displayed below.Chevron DecisionsHigh PriceLow PriceS: $5,000C: $5,500S: $1,000C: $8,000High PriceShell DecisionsS: $7,500C: $1,500S: $3,000C: $2,800Low Price

To check the Nash equilibrium: Both Shell & Chevron have dominant strategies choosing the low…

Is there a Nash Equilibrium for this game? If so, what is it? The Nash Equilibrium is for both first to choose the high price. O The Nash Equilibrium is for both first to choose the low price. The Nash Equilibrium is for Chevron to choose the high price while Shell chooses the low price. O The Nash Equilibrium is for Shell to choose the high price while Chevron chooses the low price. O There is no Nash Equilibrium for this game.

Is there a Nash Equilibrium for this game? If so, what is it? The Nash Equilibrium is for both first to choose the high price. O The Nash Equilibrium is for both first to choose the low price. The Nash Equilibrium is for Chevron to choose the high price while Shell chooses the low price. O The Nash Equilibrium is for Shell to choose the high price while Chevron chooses the low price. O There is no Nash Equilibrium for this game.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6.
QUESTION 1 Consider a simultaneous game where player A has a dominant strategy and player B has two strategies (none of which is a dominant strategy). How many pure strategy Nash equilibria will this game have? O Either 1 or 2 O Exactly 2 O Exactly 1 O None
O Macmillan Learning McLaren and Red Bull are competing for the Formula One Constructors' Championship and are deciding whether to increase their spending on their aerodynamic (aero) development. The matrix displays the payoffs to the team that result from each possible choice. Note that, due to other factors, the payoffs are not symmetrical. Assume that each team's goal is to earn as many points as possible. a. Does McLaren have a dominant strategy? If so, what is it? O Yes. Their dominant strategy is to leave aero development spending unchanged. O Yes. Their dominant strategy is to increase aero development spending. O No, they do not have a dominant strategy. b. Does Red Bull have a dominant strategy? If so, what is it? O Yes. Their dominant strategy is to increase aero development spending. Yes. Their dominant strategy is to leave aero Red Bull Raise spending Do not change spending McLaren Increase spending Do not change spending McLaren earns 142 points McLaren earns 360 points…
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Why is a solution that we find through backward induction always a subgame perfect Nash equilibrium? O The results of backward induction are the only possible Nash equilibria. O The backward induction solution maximizes the combined payoffs of all players. O At each decision node, backward induction chooses the best option going forward for the player who moves at that point. O When we use backward induction, we only consider dominant strategies. Show your steps please.
Which of the following accurately describes a player's strictly dominant strategy? O It is a strategy that is better than all the player's other strategies, no matter what the other players do. There is always at least one player who has one in every game.. O It is the strategy a player uses in the Nash equilibrium of a game. Since a Nash equilibrium always exists, players always have a strictly dominant strategy. O It is a strategy that is better than all the player's other strategies, no matter what the other players do. A player may or may not have one. O It is a strategy that is better than all the player's other strategies, no matter what the other players do. Every player has a dominant strategy in every game.. O It is the strategy a player uses in the Nash equilibrium of a game. Since a Nash equilibrium may not exist, players may not always have a strictly dominant strategy.
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4. The following payoff matrix shows the profit payoff to firms A and B from combinations of price strategies HI and LO. A НІ LOW B HI (6, 6) (16, -5) LOW (-7, 15) (0, 0) (a) In a one period game, what strategy would each firm follow, and why? Determine the equilibrium on the one-period game. (b) Now assume the game is infinite in length. Firm B goes HI in period 1 and continues with HI so long as A does as well. Firm A is deciding between HI and LO. Determine the range of discount rates for which HI is the better choice for Firm A.
2. For the game illustrated in the figure below, find all pure-strategy Nash equilibria and mixed- strategy Nash equilibria (Hint: apply IDSDS first) Player 2 W y 0,20 А 5,30 10,15 Player 1 В 0,5 15,5 5,10 0,5 0,30 -10,5
in this game table, Pepsi's payout is on the left and Sam's Choice's is on the ight. Is the Nash equilibrium a prisoner's dilemma? Pepsi High Low Sam's Choice High 110, 20 60, 10 Low 80, 40 70, 30 O No, it is not because both firms played their dominant strategies. O Yes, it is because the combined payoff for the two firms is lower than another outcome. O Yes, it is because at least one of the firms ends up with the lowest possible payoff. O No, it is not because at least one firm has achieved its highest possible payoff.
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