EBK INTERMEDIATE MICROECONOMICS AND ITS
EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 5, Problem 1RQ
To determine

To explain: how the assumption that players maximize payoffs in game theory is different from the conclusions derived in the chapters 2 and 3.

Expert Solution & Answer
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Answer to Problem 1RQ

Despite the relevance in the outcomes of game theory and utility analysis, both the concepts cannot be equated for the constraints and features involved in these concepts.

Explanation of Solution

In game theory, any player with the goal of earning high profits will maximize the payoffs. On the other hand, in demand analysis and utility analysis, consumers assume to maximize the utility through choosing appropriate choices.

However, both these concepts cannot be considered similar. There are various reasons for considering this statement to be true.

One reason is that while there are various intense contradictions among the players in the game theory, there is no such witness of contradictions in the demand and utility analysis.

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