X 8.7 Return to the game with two neighbors in Problem 8.5. Continue to suppose that player i's average benefit per hour ofwork on landscaping is 10-, +2 Continue to suppose that player 2's opportunity cost of an hour of landscaping work is 4.Suppose that player I's opportunity cost is either 3 or 5 with equal probability and that this cost is player 1's privateinformation. a. Solve for the Bayesian-Nash equilibrium. b. Indicate the Bayesian-Nash equilibrium on a best-responsefunction diagram. c. Which type of player 1 would like to send a truthful signal to player 2 if it could? Which type would like tohide his or her private information?

Answered: Image /qna-images/answer/3e67a2ff-4bee-47c8-bdcd-4a756e02a226.jpg

Answered: X 8.7 Return to the game 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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Again consider an extension of the Stag Hunt game. There are N = 3 hunters. This time each hunter has multiple effort levels in hunting for stag. Specifically, assume each hunter i can choose effort level ei = 0, 1, 2, 3, 4. Given a strategy profile (e1, e2, e3), each player i 0 s payoff = 2 min{e1, e2, e3} − ei . In words, payoff equals twice of the least effort level of everyone subtract player i’s own effort level. For example, if player 3 chooses e3 = 1, players 1 and 2 both choose effort level 4 then the minimum effort level min{e1, e2, e3} = 1, so player 3’s payoff equals 2 × 1 − e3 = 1 and players 1 and 2 each gets payoff 2 × 1 − 4 = −2. a. Is a strategy profile in which all players choose the same effort level a Nash equilibrium? Explain. (Consider what a player’s payoff is given this profile and what payoff he could get by increasing or decreasing his effort.) b. Is any profile in which not all effort levels are equal a Nash equilibrium? Explain.
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?
Use this information for questions 19-22. Consider the Acid Rain Game with new payoffs below. Total net benefits are given in the payoff matrix below. Country B $96 O $108 $90 Low $120 Abatement High Abatement Country A Low Abatement A: $20 B: $10 A: $21 B: $7 Imagine Country B discounts future profits at d=0.9. If you know that Country A will use the grim reaper punishment, what is the present value of net benefits from deviating for Country B? High Abatement A: $14 B: $18 A: $22 B: $12
Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 6 units of utility, while the small rival suffers a loss of utility of 2. If the two companies select the same technology, Microsoft suffers a loss of utility of 2 while the rival gains 2 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Microsoft Technology A Technology B Rival Technology A Rival: , Microsoft Rival: , Microsoft Technology B Rival: , Microsoft Rival: , Microsoft True or False: There is no equilibrium in pure strategies. True False Note:- Do not provide handwritten…
Construct the normal representation and the fully reduced normal representation of the game shown in Figure 1. 0 (0.5) (0.5) 1.r 1.s W1 X1 y1 Z1 0,0 2.t 2.t 0,4 a2 b2 a2 b2 Figure 1: Extensive-form game 2,-2 -2,2 -2, 2 2,-2
Consider the following game tree. The players are P1 and P2. The strategies available to P1 are L, M, R. The strategies available to P2 are A and B. P1 L R M P2 (1,10) A В A B (0,0) (2,1) (0,0) (2,1)
2. Consider the following two-player game with two players: Adam and Eve. Adam A1 A2 A3 A4 E1 6,3 5, 3 5, 0 2,0 E2 4,4 5, 4 3, 2 2, 3 Eve E3 4, 1 0,2 6, 1 3, 4 E4 3,0 5, 1 4,0 6₂ 1 a. Find the Iterated Elimination of Dominant Strategies Equilibrium for this game. Explain.
For the operating systems game, let us now assume the intrinsic superiorityof Mac is not as great and that network effects are stronger for Windows.These modifications are reflected in different payoffs. Now, the payoff fromadopting Windows is 50 X w and from adopting Mac is 15 + 5 X m;n consumers are simultaneously deciding between Windows and Mac.a. Find all Nash equilibria.b. With these new payoffs, let us now suppose that a third option exists,which is to not buy either operating system; it has a payoff of 1,000.Consumers simultaneously decide among Windows, Mac, and nooperating system. Find all Nash equilibria.
QUESTION 4 Suppose there are 2 players in a non- cooperative game theory situation. Player A can move Up or Down while Player B can choose Left or Right. The following matrix contains the payoffs that each player receives under 4 scenarios. The first number in each cell refers to the payoffs for Player A. Player A Up Down A. B. C. 10, 60 D. 20, 80 Player B Suppose Player A moves first and Player B moves second. There is one equilibrium, Up, Left Left There is one equilibrium: Down, Right. 50, 90 40, 50 There are two equilibria, (Down, Left) and (Up, Right) Right There is one equilibrium in this game, Up Right
Suppose that Jason and Chad each are thinking of opening up a diet coke stand on the fourth floor of this building. Suppose that potential customers are evenly spaced on a distance that is normalized to 1. Customers will buy a diet coke from whichever stand requires the least walking. If they are the same distance the customer will flip a coin. This is depicted below. 1/4 1/2 3/4 Suppose that Jason and Chad are simultaneously choosing the location of their stands, what is the Nash Equilibrium location? a. One of them puts a stand at 3/4 and the other puts a stand at 1/4 b. Chad and Jason put their stands right next to each other at 1/2 c. One of them puts a stand at 0 and the other puts a stand at 1 d. There is no Nash Equilibrium
Topic is information economics
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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