Question 5 Which of the following scenarios describe strategic decision-making that is consistent with a prisoners' dilemma game? I) Two individuals share access to a lake where the stock of fish is declining due to the total amount of fishing taking place. II) At an orchard, fruit pickers are formed into teams of two individuals and each individual is paid based on the amount of fruit picked by the team. III) Two competing electronic device manufacturing companies must decide on whether to use USB3 or USB-C charging cables in their products. If they use the same charging technology, the market grows quickly for both firms, but if they choose different technologies, the market grows more slowly. IV) Two neighbouring properties in Texas are located above a single underground reservoir of oil. The owner of each property drills to extract the oil, knowing that if the overall rate of extraction is too fast, air pockets will prevent some oil from being extracted. All scenarios Scenarios I, II and III Scenarios I, Il and IV Scenarios I, IIl and IV

Question 5 Which of the following scenarios describe strategic decision-making that is consistent with a prisoners' dilemma game? I) Two individuals share access to a lake where the stock of fish is declining due to the total amount of fishing taking place. II) At an orchard, fruit pickers are formed into teams of two individuals and each individual is paid based on the amount of fruit picked by the team. III) Two competing electronic device manufacturing companies must decide on whether to use USB3 or USB-C charging cables in their products. If they use the same charging technology, the market grows quickly for both firms, but if they choose different technologies, the market grows more slowly. IV) Two neighbouring properties in Texas are located above a single underground reservoir of oil. The owner of each property drills to extract the oil, knowing that if the overall rate of extraction is too fast, air pockets will prevent some oil from being extracted. All scenarios Scenarios I, II and III Scenarios I, Il and IV Scenarios I, IIl and IV

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8.8
Consider the following 2-player normal form game. Player 2 Bananas Orange Player 1 Grapes 11, 3 8, 2 Apple 9, 7 6, 5 Player 1's dominant strategy is [Select ] and Player 2's dominant strategy is [ Select ) The Nash Equilibrium of this game is ( Select ) (select all that apply).
QUESTION 2 In the game above, what is/are the sub-game perfect Nash equilibrium? (up, up) (up, down) ( down, up) (down, down) No equilibrium exists QUESTION 2 Up Down Player 1 No equilibrium exists Up In the game above, what is/are the sub-game perfect Nash equilibrium? (up,up) (up,down) (down, up) □ (down, down) Down Up Down Player 2 P1 gets $45 P2 gets $155 P1 gets $100 P2 gets $10 P1 gets $85 P2 gets $85 P1 gets $95 P2 gets $95
Up Down Up Up Down Down Player 1 Player 2 In the game above, what is/are the EFFICIENT sub-game perfect Nash equilibrium? (up,up) (up,down) (down, up) (down, down) No EFFICIENT equilibrium exists P1 gets $45 P2 gets $155 P1 gets $100 P2 gets $10 P1 gets $85 P2 gets $85 P1 gets $95 P2 gets $95
Question 1- Coordination Game There are two firms whose factories sit alongside a lake. It costs each firm $1,800 to install filters to avoid polluting the lake. Because both firms use the lake's water to produce goods, a polluted lake hurts their production process and increases their costs. Assume that the cost to each firm of a polluted lake is $1,200 times the number of polluting firms. a) Fill in the payoff matrix below based on the above information. Firm 1 Pollute Use Filter Pollute Firm 2 b) What is the pure strategy Nash Equilibrium of the game? Use Filter c) In the extensive form of the game, with Firm 1 choosing first, is the Nash Equilibrium different? Explain.
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Problem 1. Alice and Bob sell used CDs at music festivals. Each is deciding whether or not to set up their booth at the last festival of the summer. The festival is scheduled to take place in Alton, very near where Alice lives. It will cost her only $30 to travel the festival. Bob is farther away, and it will cost her $100 to travel to Alton. Both Alice and Bob would prefer to be only CD sellers at the festival, since they would avoid competition. If only one seller is at the festival, she will make $150 during the day (not counting travel costs). If both Bob and Alice sell CDs at the festival, they will lower their prices and each make $50 during the day. Both Alice and Bob receive $0 for not attending the festival. 1. Draw the Normal Form of the game Alice and Bob are playing, be sure to label the game completely. 2. Does either player have a dominant strategy? If so, what is it? 3. List all pure strategy Nash equilibria for this game. Remember that a Nash equilibrium is a strategy…