Matt and Lin are both math tutors. They know that if they collude and set a high price, both will earn a profit of 100; whereas if they both set a low price, both will earn a profit of 50. If one person sets a high price and the other person sets a low price, the person who sets a low price price gets a profit of 125 and the one with a high price gets a profit of 0. Fill in the payoffs in the normal-form game below where Lin is player 1 (represented by rows) and Matt is player 2 (represented by columns). Matt High Low Lin High Low

Matt and Lin are both math tutors. They know that if they collude and set a high price, both will earn a profit of 100; whereas if they both set a low price, both will earn a profit of 50. If one person sets a high price and the other person sets a low price, the person who sets a low price price gets a profit of 125 and the one with a high price gets a profit of 0. Fill in the payoffs in the normal-form game below where Lin is player 1 (represented by rows) and Matt is player 2 (represented by columns). Matt High Low Lin High Low

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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…
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