Answered: Micro Nash game theory Consider the…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter13: Between Competition And Monopoly

Section: Chapter Questions

Problem 10DQ

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Micro Nash game theory

Consider the game matching pennies with an external option u for player 1. Suppose that u in ]0, 1[.

a. Calculate in a very complete form the best response apps for each player.

b. Give the set of Nash equilibria for the game. please I need a formal answer, not the one already posted.

Micro Nash game theory
Consider the game matching pennies with an external option u for player 1. Suppose that u in ]0, 1[.
H
T
H
1, –1
-1, 1
т
-1,1
1, –1
й,0
и, 0

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

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