There are two political parties, the red and the blue party. The elections are approaching and each party needs to choose an advertising level. The red party acts first. The advertising level can be low, medium or high. If one party selects medium advertising and the other high, the corresponding payoffs will be 20 and 80. If one party selects low advertising and the other medium, the corresponding payoffs will be 0 and 50. If one party selects low advertising and the other high, the corresponding payoffs will be 0 and 100. If both parties select the same level of advertising, low, medium or high, each party receives a payoff of 50, 70 and 80 accordingly. a) Draw the game tree. b) Solve the game and explain. c) Is there a first-mover advantage? Explain why (not).

There are two political parties, the red and the blue party. The elections are approaching and each party needs to choose an advertising level. The red party acts first. The advertising level can be low, medium or high. If one party selects medium advertising and the other high, the corresponding payoffs will be 20 and 80. If one party selects low advertising and the other medium, the corresponding payoffs will be 0 and 50. If one party selects low advertising and the other high, the corresponding payoffs will be 0 and 100. If both parties select the same level of advertising, low, medium or high, each party receives a payoff of 50, 70 and 80 accordingly. a) Draw the game tree. b) Solve the game and explain. c) Is there a first-mover advantage? Explain why (not).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

This is a connected question that requires the first answer to get the second. Thank you for your time.
Two neighborhood kids can play at home or walk to a nearby park. Playing with their toys yields some happiness. However, they would enjoy playing with the other kid at the park even more at the park. But each has a concern that if they go the park the other will not show up. This is an interesting game or situation because neither kid has an incentive to betray the other and not show up, but each kid fears walking to the park and having no one to play with. They also have to fear that if the other kid thinks they won't show up, that other kid will won't show up. All this strategic thinking is a lot for kids to take in. Here is the payoff matrix: Kid 1 Toys at Home Park Toys at Home Kid 2 Park How many Nash equilbria are there? 1,2,3 or 4 There is an option to let Kid 1 move first, but no option for Kid 2 to move first. Should Kid 2 let Kid 1 move first. Yes or No Blank # 1 Blank # 2
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…
The count is three balls and two strikes, and the bases are empty. The batter wants to maximize the probability of getting a hit or a walk, while the pitcher wants to minimize this probability. The pitcher has to decide whether to throw a fast ball or a curve ball, while the batter has to decide whether to prepare for a fast ball or a curve ball. The strategic form of this game is shown here. Find all Nash equilibria in mixed strategies.
Game Theory
John and Paul are walking in the woods one day when suddenly an angry bear emerges from the underbrush. They each can do one of two things: run away or stand and fight. If one of them runs away and the other fights, then the one who ran will get away unharmed (payoff of 0) while the one who fights will be killed (payoff -200). If they both run, then the bear will chase down one of them and eat them to death but the other one will get away unharmed. Assuming they don't know which one will escape we will call this a payoff of -100 for both. If they BOTH fight, then they will successfully drive off the bear but they may be injured in the process (payoff -20). Construct a payoff matrix for this game and identify the pure strategy Nash equilibrium. (Indicate it with words not with a circle!)
There is a city, which looks like chopped isosceles triangle, as shown below. Citizens live uniformly distributed all over the city. Two ice-cream vendors, A and B, must independently set up stores in the city. Each citizen buys from the vendor closest to their location and when equidistant from both vendors they choose by coin toss. Each vendor’s aim is to maximize the expected number of customers. A choice of location by the two vendors is a Nash equilibrium if no vendor can do better by deviating unilaterally. Does this game have a Nash equilibrium? If so, describe it. If not, explain why not
None