MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Question
Chapter 20, Problem 2QE
(a)
To determine
Outcomes when neither cooperates .
(b)
To determine
Suggestion to Player A about the value of cheap talk.
(c)
To determine
The way in which Player A makes her pronouncement believable.
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You could choose any position A (the first mover) or B (the second mover) in
the following three bargaining games. For each game (I, II, or III), explain which
player (A or B) you would pick in order to maximize your expected payoff?
1. Game I (one stage): A will make the first move and offer her partner a portion
of 6 dollars. If the offer is accepted, the bargain is complete and each player gets an
amount determined by the offer. If the offer is declined, each player gets nothing.
2. Game II (two stages): A will make the first move and offer her partner
a portion of 12 dollars. If the offer is accepted, the bargain is complete and each
player gets an amount determined by the offer. If the offer is declined, the 12 shrinks
to 5 and B then gets a turn to make an offer. Again, the bargain is complete if A
accepts and the division is made according to the terms of the offer. If player A
declines the offer, each player gets nothing.
3. Game III (three stages): A will make the first move…
Consider a modified version of the ultimatum game, with altruism. There is a pie of size 50 to be split
between Proposer (P) and Responder (R). In the first stage, P offers a share 0 ≤ x ≤ 1 of the pie to R. In the
second stage, R accepts or rejects P's offer. If R accepts, the pie is split according to the proposed division,
with P receiving (1 - x) x 50 and R receiving x x 50. If R rejects, both players receive none of the pie.
But players' payoffs are not equal to how much of the pie they receive. In particular, payoffs in the event of an
accepted offer are:
Up (1x) x 50+ bx × 50
UR = x x 50+b(1-x) × 50
(Payoffs in the event of a rejected offer are 0 for both players.)
Here, the parameter b > 0 measures how altruistic players are, i.e. how much "happier" a player is when his
opponent receives more pie.
a) Suppose b = 0.5. How much pie does P receive in the subgame perfect Nash equilibrium of the game?
(specify the total amount of pie, not the share).
b) Suppose b=0.5. What is P's…
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.
Chapter 20 Solutions
MICROECONOMICS
Ch. 20.1 - Prob. 1QCh. 20.1 - Prob. 2QCh. 20.1 - Prob. 3QCh. 20.1 - Prob. 4QCh. 20.1 - Prob. 5QCh. 20.1 - Prob. 6QCh. 20.1 - Prob. 7QCh. 20.1 - Prob. 8QCh. 20.1 - Prob. 9QCh. 20.1 - Prob. 10Q
Ch. 20.A - Netflix and Hulu each expects profit to rise by...Ch. 20.A - Prob. 2QECh. 20 - Prob. 1QECh. 20 - Prob. 2QECh. 20 - Prob. 3QECh. 20 - Prob. 4QECh. 20 - Prob. 5QECh. 20 - Prob. 6QECh. 20 - Prob. 7QECh. 20 - Prob. 8QECh. 20 - Prob. 9QECh. 20 - Prob. 10QECh. 20 - Prob. 11QECh. 20 - Prob. 12QECh. 20 - Prob. 13QECh. 20 - Prob. 14QECh. 20 - Prob. 15QECh. 20 - Prob. 16QECh. 20 - Prob. 1QAPCh. 20 - Prob. 2QAPCh. 20 - Prob. 3QAPCh. 20 - Prob. 4QAPCh. 20 - Prob. 5QAPCh. 20 - Prob. 6QAPCh. 20 - Prob. 1IPCh. 20 - Prob. 2IPCh. 20 - Prob. 3IPCh. 20 - Prob. 4IPCh. 20 - Prob. 5IPCh. 20 - Prob. 6IPCh. 20 - Prob. 7IP
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