Suppose that Jason and Chad each are thinking of opening up a diet coke stand on the fourth floor of this building. Suppose thatpotential customers are evenly spaced on a distance that is normalized to 1. Customers will buy a diet coke from whicheverstand requires the least walking. If they are the same distance the customer will flip a coin. This is depicted below.1/41/23/4If Jason is currently at 3/4, what is Chad's best response?a. Just left of 3/4b. 1/2c. Just right of 3/4d. Just left of 1/2

If both the players stay at ½, they would be equidistant to all the consumers at all the locations.…

Answered: Suppose that Jason and Chad each are…

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) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!); and then 3) they begin playing a game that can increase or decrease that $1 million. You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game: There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game). Each player is given $3 at the start of the game. Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively. Each player knows that their payoff at the end of the game is based on their initial…
Table 9-03. Suppose you are a general in the army. Your country is at war. You are trying to invade the enemy. You can attack on the enemys east coast or the west coast. The enemy has only enough troops to defend one coast. The payoff matrix below represents whether you or the enemy wins (represented by 1) or loses (represented by 0). Enemy Defend east coast Defend west coast Enemy: 1 Enemy: 0 Attack east coast You: 0 You: 1 You Enemy: 0 Enemy: 1 Attack west coast You: 1 You: 0 Refer to Table 9-03. To win the war, O a. you must attack the west coast, only if you have credible information that the enemy is defending the east coast. O b. you must attack the west coast, and information about whether the enemy is defending the east or the west coast is irrelevant to you. c. you must attack the west coast, only if you have credible information that the enemy is defending the west coast. d. you must never attack the west coast, and information about whether the enemy is defending the east or…
8.8
Suppose Rashard and Alyssa are playing a game that requires both to simultaneously choose an action: Up or Down. The payoff matrix that follows shows the earnings of each person as a function of both of their choices. For example, the upper-right cell shows that if Rashard chooses Up and Alyssa chooses Down, Rashard will receive a payoff of 4 and Alyssa will receive a payoff of 5. Alyssa Up Down Rashard Up 8, 4 4, 5 Down 5, 4 6, 5 In this game, the only dominant strategy is for to choose . The outcome reflecting the unique Nash equilibrium in this game is as follows: Rashard chooses and Alyssa chooses.
Maipo and Pisco need to decide how to divide a cake between the two of them. Both like cake and want to get as much cake as they can. They decide to let Maipo cut the cake first and then Pisco gets to pick which piece he wants. For simplicity, assume that Maipo can only cut the cake in two ways: He can either divide it into two pieces that are equal size (i.e., both will get half the cake) or he can divide the cake into two pieces where one piece is twice the size of the other (i.e., one will get a piece that is two-thirds of the cake and the other will get a piece that is one-third of the cake). a. Set up this game as a sequential game and draw the game tree that represents it Note: You can either draw the game tree by hand and then photograph/scan the tree and paste it into the assignment or use the drawing tool in Word to draw the tree. b. Find the sub-game perfect Nash Equilibria to this game. Underline the strategies or highlight the game tree path to show what the Nash Equilibria…
Two firms are competing to establish one of two new wireless communication standards, A or B. A strategy is a choice of standard, and an outcome of this game is a choice of standard by each firm – for example, (A, B) represents the case where Firm 1 decides to develop standard A and Firm 2 develops standard B. Here, the first letter will always correspond to Firm 1’s decision, and the second letter to Firm 2’s decision. Firm 1 has the following preferences over outcomes, in order of highest to lowest preferred: it prefers (A, A) to (B, A) to (A, B) to (B, B). Firm 2 prefers (A, B) to (A, A) to (B, A) to (B, B). Suppose that firms simultaneously decide which standard to develop. What is the pure strategy Nash equilibrium?
Three players (player 1, player 2 and player 3) each chooses a positive integer QE {1, 2, 3, . 100}. If all three players choose the same integer Q, each player gets $100/3. If all three players choose different integers, the player with the largest integer gets $100, and the two other players get $0. If two players choose the same integer Q, and the third player chooses a different integer Q', then the player playing Q' gets $0, and the two players who played Q get $50 each. Find 2 Nash equilibriums in this game. ....
two timber companies, Alpha and Beta, have to decide whether to harvest timber from the North Hill or the South Hill and then sell the timbers in the same market. If both harvest from North Hill, each company can harvest 100 tons of timber. If both companies harvest from South Hill, each company can harvest 150 tons of timber. If one company harvests from North Hill and the other harvests from South Hill, the company at North Hill can harvest 150 tons of timber while the company at South Hill can harvest 250 tons of timber. The price of timber is dependent on the total supply of timber in the market. The price will be $180 per ton if the total supply is 200 tons, $150 per ton if the total supply is 300 tons and $100 per ton if the total supply is 400 tons. To both companies, the cost of harvesting in North Hill is $5,000 and the cost of harvesting in South Hill is $10,000. (a) If Alpha and Beta were to make a decision simultaneously, construct the payoff matrix in terms of profit for…
which is the nash equilibrium? small pig does press large pig does press (20, 130), small pig doesn't press large pig does press (140, 10), small pig does press large pig doesn't press (-5, 150), small pig does not press large pig doesn't press (0,0).
The US and Canada have overfished North Atlantic cod stocks nearly to the point of extinction. Both countries wish to preserve the cod industry (and hence the cod stocks), so the two countries sign an agreement to limit fish hauls. Each country has two possible strategies: comply with the agreement (limit fishing) or renege on the agreement (overfish). Each country’s payoffs for different strategy combinations are given in the matrix below. The numbers in the cells represent utilities, and the payoff ordering is (US, Canada). QUESTIONS: 1.If this is a one-shot game (i.e., it is played once), do the players have a dominant strategy? If so, what is it? Briefly explain your answer. 2.What is the equilibrium of this game? Is it Pareto-optimal? How do you know?
Two roommates John and Joe are playing a simultaneous game of cleaning the apartment. If neither of them clean, the apartment gets filthy and both get a utility of 2. If John cleans and Joe doesn’t, John gets a utility of 1 and Joe gets a utility of 4. If Joe cleans and John doesn’t, Joe gets a utility of 1 and John gets a utility of 4 and if both clean up the apartment, they each get a utility of 3. If the apartment owner decides to fine both the roommates if the apartment is dirty, such that now if neither of them clean they each get a 5 utility loss, what would the new equilibrium be now? a. John cleans, Joe doesn’t b. Joe cleans, John doesn’t c. Neither of them clean the apartment d. Both A&B
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…

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