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 16, Problem 3MC
To determine
The number of pure strategy.
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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
Consider the following game:
Sarah
R
S
T
Peter
X
9, 6
4, 4
6, -3
Y
6, 6
7, 6
2, 2
Z
9, 7
1, 5
6, 7
How many (pure strategy) Nash equilibria does this game have?
Tucker and Eddie are playing the following game. Tucker can choose A or B and Eddie can choose C or D. The first payoff is for Tucker, the second for Eddie.
Eddie
Tucker
C
D
A
3, 2
4, 3
B
4, 5
3, 4
Identify the Nash equilibrium(s) in this game. What rational game theoretic advice would you offer Tucker and Eddie on how to play this game? If Tucker and Eddie follow your advice, what payoff should each expect? Show your work.
Chapter 16 Solutions
Managerial Economics: A Problem Solving Approach
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