Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

Question

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Answer 1

Question

Chapter 65, Problem 1CYU

a)

To determine

Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

a)

Expert Solution

Explanation of Solution

Given what the other is doing, a Nash equilibrium is a set of activities from which neither party wants to stray such as changing or altering actions. In this case, the choice to build a missile by both parties is a Nash equilibrium since neither person wants to change their mind. Given that the opposing player is building a missile, switching from building to not building a missile would result in a change from 10 to 20 utils. Because for any other course of action, at least one side is not building a missile and would be better off switching to developing a missile, there is no alternative Nash equilibrium in this game.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

b)

To determine

The set of actions that maximizes the total payoff for N and M in this case.

b)

Expert Solution

Explanation of Solution

A set of actions where neither side develops a missile, then these actions can maximize the total payoff for N and M in this case. It can happen because their overall payoff will be at its highest in a set of these actions for instance, in this case, it would be equal to zero as (0+0).

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

c)

To determine

The reason why it is unlikely that N and M will choose the payoff-maximizing set of actions without any communication.

c)

Expert Solution

Explanation of Solution

Cooperation would be necessary to achieve this result because each party believes that developing a missile will benefit them. In contrast to the 0 she receives if she doesn't manufacture a missile, M receives a reward of +8 if N doesn't. Similarly, N benefits more if he develops a missile but M doesn't because he receives a reward of +8 as opposed to 0 if he doesn't. Indeed, regardless of what the other side accomplishes, both players have the motivation to develop a missile. N and M will therefore act in their interests and each will follow its dominant strategy of developing missiles unless they can somehow communicate to compel cooperation.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

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Answer 2

Question

Chapter 65, Problem 1CYU

a)

To determine

Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

a)

Expert Solution

Explanation of Solution

Given what the other is doing, a Nash equilibrium is a set of activities from which neither party wants to stray such as changing or altering actions. In this case, the choice to build a missile by both parties is a Nash equilibrium since neither person wants to change their mind. Given that the opposing player is building a missile, switching from building to not building a missile would result in a change from 10 to 20 utils. Because for any other course of action, at least one side is not building a missile and would be better off switching to developing a missile, there is no alternative Nash equilibrium in this game.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

b)

To determine

The set of actions that maximizes the total payoff for N and M in this case.

b)

Expert Solution

Explanation of Solution

A set of actions where neither side develops a missile, then these actions can maximize the total payoff for N and M in this case. It can happen because their overall payoff will be at its highest in a set of these actions for instance, in this case, it would be equal to zero as (0+0).

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

c)

To determine

The reason why it is unlikely that N and M will choose the payoff-maximizing set of actions without any communication.

c)

Expert Solution

Explanation of Solution

Cooperation would be necessary to achieve this result because each party believes that developing a missile will benefit them. In contrast to the 0 she receives if she doesn't manufacture a missile, M receives a reward of +8 if N doesn't. Similarly, N benefits more if he develops a missile but M doesn't because he receives a reward of +8 as opposed to 0 if he doesn't. Indeed, regardless of what the other side accomplishes, both players have the motivation to develop a missile. N and M will therefore act in their interests and each will follow its dominant strategy of developing missiles unless they can somehow communicate to compel cooperation.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

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Answer 3

Question

Chapter 65, Problem 1CYU

a)

To determine

Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

a)

Expert Solution

Explanation of Solution

Given what the other is doing, a Nash equilibrium is a set of activities from which neither party wants to stray such as changing or altering actions. In this case, the choice to build a missile by both parties is a Nash equilibrium since neither person wants to change their mind. Given that the opposing player is building a missile, switching from building to not building a missile would result in a change from 10 to 20 utils. Because for any other course of action, at least one side is not building a missile and would be better off switching to developing a missile, there is no alternative Nash equilibrium in this game.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

b)

To determine

The set of actions that maximizes the total payoff for N and M in this case.

b)

Expert Solution

Explanation of Solution

A set of actions where neither side develops a missile, then these actions can maximize the total payoff for N and M in this case. It can happen because their overall payoff will be at its highest in a set of these actions for instance, in this case, it would be equal to zero as (0+0).

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

c)

To determine

The reason why it is unlikely that N and M will choose the payoff-maximizing set of actions without any communication.

c)

Expert Solution

Explanation of Solution

Cooperation would be necessary to achieve this result because each party believes that developing a missile will benefit them. In contrast to the 0 she receives if she doesn't manufacture a missile, M receives a reward of +8 if N doesn't. Similarly, N benefits more if he develops a missile but M doesn't because he receives a reward of +8 as opposed to 0 if he doesn't. Indeed, regardless of what the other side accomplishes, both players have the motivation to develop a missile. N and M will therefore act in their interests and each will follow its dominant strategy of developing missiles unless they can somehow communicate to compel cooperation.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

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Answer 4

Question

Chapter 65, Problem 1CYU

a)

To determine

Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

a)

Expert Solution

Explanation of Solution

Given what the other is doing, a Nash equilibrium is a set of activities from which neither party wants to stray such as changing or altering actions. In this case, the choice to build a missile by both parties is a Nash equilibrium since neither person wants to change their mind. Given that the opposing player is building a missile, switching from building to not building a missile would result in a change from 10 to 20 utils. Because for any other course of action, at least one side is not building a missile and would be better off switching to developing a missile, there is no alternative Nash equilibrium in this game.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

b)

To determine

The set of actions that maximizes the total payoff for N and M in this case.

b)

Expert Solution

Explanation of Solution

A set of actions where neither side develops a missile, then these actions can maximize the total payoff for N and M in this case. It can happen because their overall payoff will be at its highest in a set of these actions for instance, in this case, it would be equal to zero as (0+0).

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

c)

To determine

The reason why it is unlikely that N and M will choose the payoff-maximizing set of actions without any communication.

c)

Expert Solution

Explanation of Solution

Cooperation would be necessary to achieve this result because each party believes that developing a missile will benefit them. In contrast to the 0 she receives if she doesn't manufacture a missile, M receives a reward of +8 if N doesn't. Similarly, N benefits more if he develops a missile but M doesn't because he receives a reward of +8 as opposed to 0 if he doesn't. Indeed, regardless of what the other side accomplishes, both players have the motivation to develop a missile. N and M will therefore act in their interests and each will follow its dominant strategy of developing missiles unless they can somehow communicate to compel cooperation.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

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Answer 5

Chapter 65, Problem 1CYU

a)

To determine

Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

a)

Expert Solution

Explanation of Solution

Given what the other is doing, a Nash equilibrium is a set of activities from which neither party wants to stray such as changing or altering actions. In this case, the choice to build a missile by both parties is a Nash equilibrium since neither person wants to change their mind. Given that the opposing player is building a missile, switching from building to not building a missile would result in a change from 10 to 20 utils. Because for any other course of action, at least one side is not building a missile and would be better off switching to developing a missile, there is no alternative Nash equilibrium in this game.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

b)

To determine

The set of actions that maximizes the total payoff for N and M in this case.

b)

Expert Solution

Explanation of Solution

A set of actions where neither side develops a missile, then these actions can maximize the total payoff for N and M in this case. It can happen because their overall payoff will be at its highest in a set of these actions for instance, in this case, it would be equal to zero as (0+0).

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

c)

To determine

The reason why it is unlikely that N and M will choose the payoff-maximizing set of actions without any communication.

c)

Expert Solution

Explanation of Solution

Cooperation would be necessary to achieve this result because each party believes that developing a missile will benefit them. In contrast to the 0 she receives if she doesn't manufacture a missile, M receives a reward of +8 if N doesn't. Similarly, N benefits more if he develops a missile but M doesn't because he receives a reward of +8 as opposed to 0 if he doesn't. Indeed, regardless of what the other side accomplishes, both players have the motivation to develop a missile. N and M will therefore act in their interests and each will follow its dominant strategy of developing missiles unless they can somehow communicate to compel cooperation.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

Answer 6

Chapter 65, Problem 1CYU

a)

To determine

Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

a)

Expert Solution

Explanation of Solution

Given what the other is doing, a Nash equilibrium is a set of activities from which neither party wants to stray such as changing or altering actions. In this case, the choice to build a missile by both parties is a Nash equilibrium since neither person wants to change their mind. Given that the opposing player is building a missile, switching from building to not building a missile would result in a change from 10 to 20 utils. Because for any other course of action, at least one side is not building a missile and would be better off switching to developing a missile, there is no alternative Nash equilibrium in this game.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

Answer 7

Chapter 65, Problem 1CYU

a)

To determine

Nash equilibrium that exists in this game and the reason why it exists or why it does not exist.

Answer 8

a)

Expert Solution

Explanation of Solution

Given what the other is doing, a Nash equilibrium is a set of activities from which neither party wants to stray such as changing or altering actions. In this case, the choice to build a missile by both parties is a Nash equilibrium since neither person wants to change their mind. Given that the opposing player is building a missile, switching from building to not building a missile would result in a change from 10 to 20 utils. Because for any other course of action, at least one side is not building a missile and would be better off switching to developing a missile, there is no alternative Nash equilibrium in this game.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

Answer 13

b)

To determine

The set of actions that maximizes the total payoff for N and M in this case.

b)

Expert Solution

Explanation of Solution

A set of actions where neither side develops a missile, then these actions can maximize the total payoff for N and M in this case. It can happen because their overall payoff will be at its highest in a set of these actions for instance, in this case, it would be equal to zero as (0+0).

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

Answer 14

b)

To determine

The set of actions that maximizes the total payoff for N and M in this case.

Answer 15

b)

Expert Solution

Explanation of Solution

A set of actions where neither side develops a missile, then these actions can maximize the total payoff for N and M in this case. It can happen because their overall payoff will be at its highest in a set of these actions for instance, in this case, it would be equal to zero as (0+0).

Answer 16

b)

Expert Solution

Answer 17

b)

Expert Solution

Answer 18

Expert Solution

Answer 19

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

Answer 20

c)

To determine

The reason why it is unlikely that N and M will choose the payoff-maximizing set of actions without any communication.

c)

Expert Solution

Explanation of Solution

Cooperation would be necessary to achieve this result because each party believes that developing a missile will benefit them. In contrast to the 0 she receives if she doesn't manufacture a missile, M receives a reward of +8 if N doesn't. Similarly, N benefits more if he develops a missile but M doesn't because he receives a reward of +8 as opposed to 0 if he doesn't. Indeed, regardless of what the other side accomplishes, both players have the motivation to develop a missile. N and M will therefore act in their interests and each will follow its dominant strategy of developing missiles unless they can somehow communicate to compel cooperation.

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.

Answer 21

c)

To determine

The reason why it is unlikely that N and M will choose the payoff-maximizing set of actions without any communication.

Answer 22

c)

Expert Solution

Explanation of Solution

Cooperation would be necessary to achieve this result because each party believes that developing a missile will benefit them. In contrast to the 0 she receives if she doesn't manufacture a missile, M receives a reward of +8 if N doesn't. Similarly, N benefits more if he develops a missile but M doesn't because he receives a reward of +8 as opposed to 0 if he doesn't. Indeed, regardless of what the other side accomplishes, both players have the motivation to develop a missile. N and M will therefore act in their interests and each will follow its dominant strategy of developing missiles unless they can somehow communicate to compel cooperation.

Answer 23

c)

Expert Solution

Answer 24

c)

Expert Solution

Answer 25

Expert Solution

Answer 26

Economics Concept Introduction

Introduction: An equilibrium where it is assumed that all players are aware of one another's equilibrium strategies and changing one's own strategy will not help anyone, is called Nash equilibrium.