Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 13, Problem 10DQ
(a)
To determine
The impact of revenge on the interest of an individual.
(b)
To determine
Advantages of having reputation for irrationality.
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Students have asked these similar questions
Sam and Sarah are thinking about getting married. However if either of them cheats on the other, they would get a payoff of 10, while the other person gets zero. If neither cheat, they stay with each other and get a payoff of 7 each and if both cheat, the relationship falls apart and each get a payoff of 1.
What is the Nash equilibrium of this game?
a. Cheat, Cheat
b. Not cheat, Not cheat
Sam cheats, Sarah doesn't
Sarah cheats, Sam doesn't
In game theory, what does the term "payoff" refer to?
a) The amount of money each player has at the beginning of the game.
b) The final outcome of the game.
c) The utility or benefit that a player receives based on the outcome of the game.
d) The number of strategies available to each player.
Answer all the questions, show all the working.
Consider the following game in normal form.
Not cooperate
Cooperate
Not cooperate
20,20
50,0
Cooperate
0,50
40,40
What is Nash equilibrium? Is it efficient? Why?
What needs to be complied with so that the players would like to cooperate? What happens when one of the players does not cooperate? Why? Define trigger strategy.
Calculate the discount factor (δ) that would make both players decide to cooperate.
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Similar questions
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