Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 18, Problem 4MCQ
To determine
To choose:
The option that correctly explains about the prisoners' dilemma game.
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In the prisoners' dilemma game, each player____________
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OA. chooses the best outcome for himself
B. consults the other player to determine his best action
C. chooses the best outcome for both players together
OD. chooses the best outcome for the other player
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
Roger and Rafael play a game with the following rules. Roger is given $250 to divide between himself and Rafael. Rafael does not get to choose but he can reject Roger’s offer if he does not like it. If Rafael rejects, both get nothing. If Rafael accepts, both get the split that Roger decided.
a. What is this game called?
b. Find all Nash equilibria for this game.
c. When this game is played in the real world, do the predictions in part 1b materialize? Why/why not?
d. Are all Nash equilibria in part 1b Pareto Optimal? Explain
Chapter 18 Solutions
Foundations of Economics (8th Edition)
Ch. 18 - Prob. 1SPPACh. 18 - Prob. 2SPPACh. 18 - Prob. 3SPPACh. 18 - Prob. 4SPPACh. 18 - Prob. 5SPPACh. 18 - Prob. 6SPPACh. 18 - Prob. 7SPPACh. 18 - Prob. 8SPPACh. 18 - Prob. 1IAPACh. 18 - Prob. 2IAPA
Ch. 18 - Prob. 3IAPACh. 18 - Prob. 4IAPACh. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Prob. 7IAPACh. 18 - Which of the following statements is incorrect. In...Ch. 18 - If firms in oligopoly form a cartel, it will...Ch. 18 - Prob. 3MCQCh. 18 - Prob. 4MCQCh. 18 - Prob. 5MCQCh. 18 - Prob. 6MCQCh. 18 - Prob. 7MCQ
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- MULTIPLE CHOICE (identify the one best answer below and explain your reasoning for each option): If James is the leader in the game then: (hint: you can draw the game tree to see it better)a. There are two equilibrium outcomes that coincide with the Nash equilibria.b. The unique equilibrium outcome is James playing Rooster and Buzz playing Chicken.c. The equilibrium outcome is the same as if Buzz were the leader.d. All of the above.e. None of the abovearrow_forwardIn the following 3-player game, the payoffs represent the number of years in jail. The equilibrium is ________ Group of answer choices Eric and Ned denies. Eric and Tim confess, but Ned denies. Eric confesses, Ned and Tim deny. Eric and Time deny, but Ned confessesarrow_forwardGAME ZZZ B1 Player B A1 30, 30 Player A A2 20, 40 B2 40, 20 35, 35 In the Game ZZZ (see table above), all payoffs are listed with the row player's payoffs first and the column player's payoffs second. In this game, neither player has a dominant strategy. the Nash equilibrium does not maximize the total payoff. there is no Nash equilibrium. the Nash equilibrium maximizes the total payoff.arrow_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_forwardThe outcome of a prisoners' dilemma game with a Nash equilibrium is that Question 20 options: both players confess. both players deny. there is no equilibrium. one player denies and one player confesses.arrow_forwardWhich 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_forward
- Economics 4. Suppose you are going to play a game with four other people in our class. The rule of the game is that: each of them will choose a number between and 100 (including 0 and 100). The winner of the game is the one whose chosen number is the closest to [20+* average of everyone's chosen number]. The winner can get $100 form Josie. Everyone choosing 20 is a Nash Equilibrium. (a) True (b) False please explain it in detail.arrow_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_forwardEconomics Game theory: Consider a collective action game with thirty individuals (N = 30). When the number of participants in the joint project is n, each individual, including shirkers, receives a benefit of B(n) = 18n and each participant incurs a cost of C(n) = 32 – 2n. Please answer the questions I am asking! 1. Find all of the Nash equilibria, both stable and unstable ones. 2. Find the socially optimal outcome. 3. Check if any of the Nash equilibria is socially optimal. Explain your answer.arrow_forward
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