The situation is the case of 'Partially Aligned Interests: Financial Adviser and Investor' in Chapter 9. You will complete a similar analysis for the case where the adviser's report has to be the coarser choice between B or "not B." In this case, the game is represented as the following tree: Nature ● B (1/3) M (1/3) G (1/3) Bad Adviser ● Not Bad Adviser • Not Bad Adviser ● Not Bad You You You Invest Not Invest Not i Invest I Not Not Invest "Not 2,-52 0,0 2-L, -52 0,0 2.2, -1.2 0,0 13, 42 0, 0 where L is the cost of lost reputation from exaggeration. The babbling Nash Equilibrium of this game is

The situation is the case of 'Partially Aligned Interests: Financial Adviser and Investor' in Chapter 9. You will complete a similar analysis for the case where the adviser's report has to be the coarser choice between B or "not B." In this case, the game is represented as the following tree: Nature ● B (1/3) M (1/3) G (1/3) Bad Adviser ● Not Bad Adviser • Not Bad Adviser ● Not Bad You You You Invest Not Invest Not i Invest I Not Not Invest "Not 2,-52 0,0 2-L, -52 0,0 2.2, -1.2 0,0 13, 42 0, 0 where L is the cost of lost reputation from exaggeration. The babbling Nash Equilibrium of this game is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following game. Which one of the following statements is FALSE? 1. There are 7 subgames in this extensive-form game. 2. There are 6 proper subgames in this extensive-form game. 3. (BK, CE) is a Subgame Perfect Nash Equilibrium. 4. (BK, DE) is a Subgame Perfect Nash Equilibrium
1) Consider the following variant of the prisoner's dilemma with altruistic preferences. For simplicity, I'm adding 15 to the payoffs of the baseline normal form representation of the game we describe in class which results in the following: Player I\ Player 2 Cooperate Non-Cooperate Cooperate 8.8 0,15 Non Cooperate 15,0 14,14 Assume now that the players are not “selfish”; rather the preference of each player i are represented by the payoff (utility) function m; (a) + ßm; (a) where mi(a) is the payoff received by player i when the strategy profile is a, j is the other player, and ß is a given non-negative number. Player 1's payoff to the strategy profile (Cooperate, Cooperate), for example, is 8+8ß. A) Assume ß = 1. Write the normal form of the game. Is this game a prisoner's dilemma? What is the Nash equilibria of the game? B) Find the range of values of ß for which the resulting game is the prisoner's dilemma.
Jane is interested in buying a car from a used car dealer. Her maximum willingness to pay for thecar is 12 ($12,000). Bo, the dealer, is willing to sell the car as long as he receives at least 9($9,000). What is the Nash bargaining solution to this game?
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Within a voluntary contribution game, the Nash equilibrium level of contribution is zero, but in experiments, it is often possible to sustain positive levels of contribution for a long period. How might we best explain this? A) Participants are altruistic, and so value the payoff which other participants receive, benefiting (indirectly) from making a contribution. B) Participants believe that if they make a contribution, then other participants will be more likely to make a contribution. C) Participants in experiments believe that they have to make contributions in order to receive any payoff from their participation. D) Participants have experience of working in situations in which cooperation can be sustained for mutual benefit and so have internalised a social norm of cooperation
“To be or not to be, that is the question.” Imagine that in answering this question Hamlet had the following data to consider. Hamlet must choose either “To Be” or “Not to Be.” If Hamlet chooses “To Be” then his enemy the King will make a decision to either “Kill” Hamlet or let him “Live.” If Hamlet is killed by the King his payoff in this game is 200 since he will have been killed by the King who is his uncle and who also killed Hamlet’s father, the King’s brother, who was the prior king. If the King decides to let Hamlet Live then Hamlet will be able to avenge his father’s death and his payoff will be +300. Hamlet also considers suicide an option but given the uncertainty of the afterlife if he chooses not to be then his payoff is +100 since his doesn’t what the afterlife holds for one who kills himself. Draw the complete game tree for this situation. Be sure to accurately label the tree and include the payoffs. Assume Hamlet will choose the course of action that offers the highest…
Suppose that you are a manager. You are considering whether or not to monitor employees with the payoffs in the normal-form accompanying game. Worker Work Shirk Manager Monitor -1,1 1,-1 Don't Monitor 1,-1 -1,1 Which of the following pairs of strategies constitutes a Nash equilibrium? Multiple Choice Manager monitors and worker shirks. Manager does not monitor and worker works. Manager monitors and worker works. O None of the answers is correct.
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Two supermarkets face the following possibilities. Superstore Advertise Don’t Advertise Megastore Advertise $95, $80 $305, $55 Don’t Advertise $65, $285 $165, $115 47. A Nash equilibrium is Group of answer choices for Megastore to advertise and for Superstore to advertise. for Megastore to advertise and for Superstore not to advertise for Megastore not to advertise and for Superstore to advertise. for Megastore not to advertise and for Superstore not to advertise. There is no Nas equilibrium in this rivalry game.
You suspect that you are a price leader in the market. Moreover, you are considering expanding your operations. H.R. Shovenstuff will observe your moves and then follow, but he is more secretive so you will not know whether to price high or low after his pricing decision has been made. Using the following game tree, solve for the Nash equilibrium. High Price Shovenstuff High Price Low Price You High Price (2,1) (6,2) Invest Low Price Invest, High Price, High Price O Invest, Low Price, High Price Invest, Low Price, Low Price O Don't Invest, High Price, High Price Don't Invest, Low Price, High Price LOW Price (2,4) You High Price (4,4) Don't Invest High Price Low Price Shovenstuff Low Price You High Price (8,1) (2.6) Low Price (2,1)
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