Two firms face decisions with two alternatives that can be modeled using Game Theory. For eachof the situations described below, CIRCLE the ("Nash") equilibrium (or equilibria) for the"game" given the profit payouts (firm 1, firm 2) for the choices for the firms (or mark "None").a. Sell One Medium-Size Item or Sell One Large Item and One Small ItemFirm 1 ChoicesFirm 2 ChoicesMedium-Size ItemLarge and Small ItemsMedium-Size Item31,2725, 33Large/Small Items42,2430,28b. Use "9" Price Endings or Use "5" Price EndingsFirm 2 ChoicesUse "9" Price Endings | Use "5" Price EndingsFirm 1 ChoicesUse "9" EndingsUse "5" Endings45,2842,30c. Hire a Celebrity Endorser or Donate to Charity27,2525,28Firm 2 ChoicesFirm 1 ChoicesHire Celebrity EndorserDonate to CharityCelebrity Endorser40, 2930, 33Donate to Charity37,3648, 32d. Locate Downtown or Locate in Suburban Strip MallFirm 2 ChoicesFirm 1 ChoicesLocate DowntownLocate in Strip MallLocate Downtown32,3128, 34Locate in Strip Mall |36,2230,25

Let's analyze each scenario from the image:a. Sell One Medium-Size Item or Sell One Large Item and…

Answered: Two firms face decisions with two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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V4
Consider the following game where two players have to decide if they want to buy a movie ticket or a baseball ticket. They have the highest payoffs when they both buy tickets to the same activity, but must decide simultaneously what to buy without knowing what the other person will do. a. Does either player have a dominant strategy? b. How many equilibria does this game have? c. Is this an example of a prisoner’s dilemma? Explain. d. What will be the outcome if your friend buys their ticket first and you can observe their choice?
For problem 1 and 2, consider the following game : с D A (0,5) (5,-5) B (3, 1) (1, 0) 1. Show that the game above doesn't have a pure Nash equilibrium. 2. Show that the game above has a unique mixed Nash equilibrium, and describe the playing strategy.
3. The following is an interpretation of the rivalry between the United States (USA) and the Soviet Ünion (USSR) during the cold war. Each side has the choice of two strategies: Aggressive and Restrained. The payoff table is given as follows: USSR Restrained Aggressiveness Restrained 4,3 1,4 USA Aggressiveness 3,1 2,2 a) Consider this game when the two countries move simultaneously. Find all pure strategy Nash equilibria. b) Next consider three alternative ways in which the game could be played with sequential moves: (i) The USA moves first and the USSR moves second. (i) the USSR moves first and the USA moves second. (i) The USSR moves first, and the USA moves second, but the USSR has a further move after the USA moves. For each case, draw the game tree and find the subgame-perfect Nash equilibrium. c) What are the key strategic issues (commitment, credibility and so on) for the two countries. (Note: Be concise. Your answer should not exceed 300 words].
We can see from the payoff matrix that there are no pure strategy Nash equilibrium in this game because at least one firm would always have an incentive to change its behavior. From Nash's theorem, we know there must be at least one Nash equilibrium so there must be a mixed strategy Nash equilibrium for this game. Find the mixed strategy Nash equilibrium by first deleting all dominated strategies in the game What's the expected payoff to Firm 1 in the equilibrium?
Find the Nash equilibrium strategy and payoff in this simultaneous game. Show your work. Firms can collude (C) or not collude (NC) and their profits in millions are as follows. Please see attached.
What are the sub games in the following game? Find all subgame perfect Nash equilibria (SPNE)
We can see from the payoff matrix that there are no pure strategy Nash equilibrium in this game because at least one firm would always have an incentive to change its behavior. From Nash's theorem, we know there must be at least one Nash equilibrium so there must be a mixed strategy Nash equilibrium for this game. Find the mixed strategy Nash equilibrium by first deleting all dominated strategies in the game What's the expected payoff to Firm 2 in the equilibrium?
O Cell A O Cell C O Cell E O Cell I None of the above
Consider the game in the table below. Find the Nash Equilibrium of the game. Add the payoffs of both players at the Nash Equilibrum and enter that number. Firm A Left Right Up Firm B 9,11 5,6 own 5,10 6,5 20
Two rival companies competing in the same market need to decide their plans for future expansion of their stores. The Table below shows the possible outcomes of their mutually interdependent actions (payoffs are profits in £m) Giga Company Titanic Conglomerate No Change Refurbishment of existing stores Large Expansion No Change 30, 40 25, 35 15, 24 Refurbishment of existing stores 35, 30 28, 32 18, 33 Large Expansion 12, 22 18, 20 20, 25 The Nash equilibrium: (A) does not exist. (B) occurs when both firms choose Refurbishment of existing stores. (C) occurs when both firms choose Large Expansion. (D) occurs when both firms choose No Change.
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).

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