(KEY QUESTION) Consider the following strategic interaction between two Australia telecommuncation companies deciding to set the prices of their 'unlimited calls' mobile package. Оptus Medium 13, 1 10, 8 3, 16 High 17,-8 15,3 11,9 Low Low Medium 2,3 1, 10 -10, 19 a. Put yourself in the shoes of a CEO of these companies. Try to explain the business reasons behind the relationships between the various payoffs (obviously, this is just an example, they may differ in the real world and change over time). For example, why is Low in the payoff matrix the best response to the opponent playing High? Why is the payoff from (High, High) higher for both players than from Telstra High (Medium, Medium)? b. State all the dominated strategies in the game, by which strategy they are dominated, and whether weakly or strictly. What is the equilibrium outcome by dominance, if any? c. What are the pure-strategy Nash equilibria of this game?

(KEY QUESTION) Consider the following strategic interaction between two Australia telecommuncation companies deciding to set the prices of their 'unlimited calls' mobile package. Оptus Medium 13, 1 10, 8 3, 16 High 17,-8 15,3 11,9 Low Low Medium 2,3 1, 10 -10, 19 a. Put yourself in the shoes of a CEO of these companies. Try to explain the business reasons behind the relationships between the various payoffs (obviously, this is just an example, they may differ in the real world and change over time). For example, why is Low in the payoff matrix the best response to the opponent playing High? Why is the payoff from (High, High) higher for both players than from Telstra High (Medium, Medium)? b. State all the dominated strategies in the game, by which strategy they are dominated, and whether weakly or strictly. What is the equilibrium outcome by dominance, if any? c. What are the pure-strategy Nash equilibria of this game?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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2A
g, h and I
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60B- What is the Nash equilibrium for this game and identify the profit each player gets at this solution 5 m