Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 15, Problem 6MC
To determine
Nash equilibrium.
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Students have asked these similar questions
What is the Nash Equilibrium in a game? A. A situation where all players cooperate for maximum gain B. A situation where no player can improve their outcome by changing their strategy unilaterally C. A situation where players always choose the same strategy D. A situation where players randomly select strategies
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.
QUESTION 2
Which of the following statements about a Nash equilibrium is not correct?
A.
For each finite noncoopertiave game there always exists a pure strategy Nash equilibrium.
B.
A game has at least two players.
C.
Each player plays a best response to opponents' Nash strategies.
D.
No player has a profitable unilateral deviation.
Chapter 15 Solutions
Managerial Economics: A Problem Solving Approach
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Similar questions
- Which of the following correctly characterizes a Nash Equilibrium: a. The players could not be jointly better off if they cooperated. b. There is no incentive for either player to deviate from their strategy because the outcome maximizes the combined payoff of all players. c. Neither player has incentive to deviate from their strategy given the other player's strategy d. Neither player can have a dominant strategy..arrow_forwardIn a game, a Nash equilibrium is reached only if the players ________. a. understand the game and the payoffs associated with each strategy b. use backward induction to develop their strategies c. follow a mixed strategy d. have no best response for the choices made by other playersarrow_forward22. In order for a set of strategies to constitute a Nash Equilibrium a. Each player must adopt a dominant strategy b. Each player must adopt a mixed strategy c. Players must coordinate to adopt the set of strategies that will maximize their joint payoffs. d. Each player must adopt a strategy that results in the best outcome for the other player. e. Each player must adopt a strategy that is a best response to the strategies of the other players.arrow_forward
- 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'tarrow_forwardUse the following one-shot, normal-form game to answer the following questions a. Find each player’s dominant strategy, if it exists. b. Find each player’s secure strategy. c. Find the Nash equilibrium.arrow_forwardTyped plz and asap thanksarrow_forward
- Use the following extensive-form game to answer the following questions. a. List the feasible strategies for player 1 and player 2. b. Identify the Nash equilibria to this game. c. Find the subgame perfect equilibrium.arrow_forwardAny parts appreciated the more the better.arrow_forwardWhich of the following statements about a Nash equilibrium is not correct? A. Each player plays a best response to opponents' Nash strategies. B. No player has a profitable unilateral deviation. C. For each finite noncoopertiave game there always exists a pure strategy Nash equilibrium. D. A game has at least two players. Which one of the following statements is incorrect? A. For dynamic games with complete information, not all subgame perfect Nash equilibrium points can be found by backward induction. B. A finite dynamic game with complete information may also have a normal form representation. C. A finite static game with complete information may not have a pure strategy Nash equilibrium. D. A finite static game with complete information cannot have an extensive form representation. Which one of the following statements is correct? A. A supergame cannot have any subgame perfect Nash equilibrium. B. A supergame can only have finite number of subgame perfect Nash…arrow_forward
- When there's uncertainty as to the length of a game A. cooperation can potentially occur if trigger strategies are adopted. B. firms will randomize among the Nash equilibria. C. cooperation still does not occur, because cooperation unravels at the beginning of the game. D. firms will cooperate because they treat the game as one that is infinitely repeated.arrow_forward9. Little Kona is a small coffee company that is consider- ing entering a market dominated by Big Brew. Each company's profit depends on whether Little Kona enters and whether Big Brew sets a high price or a low price: Little Kona Enter Don't Enter High Price Kona makes $2 million Kona makes zero Big Brew Brew makes $3 million Brew makes $7 million Kona loses $1 million Low Price Kona makes zero Brew makes $1 million Brew makes $2 millionarrow_forwardThe game, "the battle of the sexes" (discussed in class) has pure strategy Nash Equilibria and mixed strategy Nash Equilibrium (again in numbers). Of these 3 strategy, Hide hint for Question 3 are pareto efficient. Fill in the blanks with numbers - don't write out the numbers. 4 not four.arrow_forward
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