Lab 4 Prompt - SUM22

You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.”  The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!); and then 3) they begin playing a game that can increase or decrease that $1 million. You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game: There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game). Each player is given $3 at the start of the game. Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively. Each player knows that their payoff at the end of the game is based on their initial $3,…

Кееp production $200 million $300 million Using what you know about the prisoner's dilemma, what would be the profit for Antel and constant IMD in millions? (cooperate Antel profit Antel profit is $20 million is $200 million Antel options IMD profit is IMD profit is $20 million $100 million Increase production (act independently) Antel profit Antel profit is $100 million is $300 million Antel profit: S million million IMD profit: S What would be the best collective option for both firms? Select all of the reasons Antel and IMD would make more profit at the original constant production level? соорerate Because overall demand for computer chips act independently will increase Because they can both charge more for the product at the given level of production Because it restricts the supply of computer chips

What is the difference between collusion and competition?   Group of answer choices   1-Competition is when firms operate independently. Collusion is when firms in the oligopoly market structure try to invite new entrants into the market to make it more competitive.   2-Collusion is when firms act together in ways to reduce output, keep prices high, and divide up markets. Competition is when firms operate independently.   3-Competition firms follow the price changes and product changes of the dominant firm in an oligopolistic market. Collusion is when firms operate independently.   4-Collusion is when firms follow the price changes and product changes of the dominant firm in an oligopolistic market.Competition is when firms operate independently.

Company A and Company B are competing oligopolists. Both companies are considering increasing or maintaining their prices. The payoff matrix shows the profits of the companies in millions based on their possible actions.. Company A Increase Price Company B Increase Price Maintain Price $50, $40 Maintain Price $55, $45 $35, $30 $60, $35 The government offers a $5 million subsidy to maintain current pricing. What is the expected outcome of the new payoff matrix, given the subsidy? The Nash equilibrium changes, and both companies will maintain their prices The Nash equilibrium changes, and both companies will increase their prices. The Nash equilibrium remains the same, and both companies will increase their prices Company A will increase its price, while Company B maintains its price. Company A will maintain its price, while Company B increases its price

Well explained answer and well labeled

Why do you think there is a need to use communication strategies?

Game Theory and Strategic Choices - End of Chapter Problem Your instructor challenges you to solve this classic economics thought experiment called the stag hunt: Suppose you and a hunting partner are hunting for food to feed your families in a post-apocalyptic world with no stores, farms, or trade. You lay a trap for a deer that will provide a large number of calories for your two families to continue to survive. While waiting, you both spot a hare running through the trap. If you chase after the hare, you'll catch it but you will scare any wildlife in the area and you won't catch the deer you were waiting for. The hare only provides a small amount of calories for your own family and none for your partner's family. Use the payoff matrix to answer the question. You hunt the deer You hunt the hare Your friend hunts the deer Your payoff is 5 Your friend's payoff is 5 Your payoff is 2 Your friend's payoff is A Your friend hunts the hare Your payoff is A Your friend's payoff is 2 Your…

6) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!), and then 3) they begin playing a game that can increase or decrease that $1 million. You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game: I. There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game). II. Each player is given $3 at the start of the game. III. Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively. IV. Each player knows that their payoff at the end of the game is based on…

6) You have been assigned to create a new TV game show, and you have an interesting idea that you call, “I WANT TO BE A MILLIONAIRE.” The basics are: 1) two contestants; 2) the show begins with each contestant being given $1 million (!), and then 3) they begin playing a game that can increase or decrease that $1 million. You worry that the initial outlay of $2 million will stun your producers, so you decide to prepare them with a simpler version of your game that you call: “I WANT $3.” There are four steps in this simpler game: I. There are two contestants/opponents (who do not know each other and cannot communicate with each other during the game). II. Each player is given $3 at the start of the game. III. Independently and simultaneously, each player must choose whether they want to add $0, $1, $2 or $3 to their initial stake of $3. Doing so reduces their opponent’s award by $0, $2, $4, or $6, respectively. IV. Each player knows that their payoff at the end of the game is based on…

4.2. Game theory (Prisoner's dilemma). Often, many sectors in an economy have two main rivals, battling it out in the marketplace. There can be rivalry such as between Apple and Samsung in Phones and Laptops. Suppose Apple plans to cut its price. Samsung will likely follow suit to retain its market share. This may end up with low profits for both companies. A price drop by either company may thus be construed as defecting since it breaks an implicit agreement to keep prices high and maximize profits. Thus, if Apple drops its price but Samsung continues to keep prices high, Apple is defecting, while Samsung is cooperating (by sticking to the spirit of the implicit agreement). In this scenario, Apple may win market share and earn incremental profits by selling more. Assume that the incremental profits that accrue to Apple and Samsung are as follows: If both keep prices high (Cooperate), profits for each company increase by AED200 million (because of normal growth in demand). If one drops…

Exercise 3.12. Three players, Avinash, Brian and John, play the following game. Two cards, one red and the other black, are shuffled well and put face down on the table. Brian picks the top card, looks at it without showing it to the other players GAME THEORY - Giacomo Bonanno 124 (Avinash and John) and puts it back face down. Then Brian whispers either "Black" or "Red" in Avinash's ear, making sure that John doesn't hear. Avinash then tells John either "Black" or "Red". Finally John announces either "Black" or "Red" and this exciting game ends. The payoffs are as follows: if John's final announcement matches the true color of the card Brian looked at, then Brian and Avinash give $2 each to John. In every other case John gives $2 each to Brian and Avinash. (a) Represent this situation as an extensive-form game. (b) Write the corresponding strategic form (or normal form) assuming that the players are selfish, greedy and risk neutral.

Life insurance policies typically have clauses stipulating the insurance company will not pay claims arising from suicide for a specified term—typically two years from the date the policy was issued. Use precise economic terminology to explain the likely impact on an insurance company’s bottom line if it were to eliminate such a clause

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Mercedes Benz seem to win every time with their social media campaigns.  The one that stands out to me was back in 2013 when they created what I still believe to be one of the best Instagram marketing campaigns to date. Mercedes wanted to reach out to the younger audience so they hired five top Instagram photographers to each take the wheel of a new Mercedes CLA. Whoever got the most likes got to keep the car – so they all really worked at it! By the end of the campaign, Mercedes has received: 87,000,000 organic Instagram impressions 2,000,000 Instagram likes 150 new marketing assets (stunning photos) Q1. What lessons can you learn from this? Could you put your followers up for a challenge and make it into a competition or campaign? Q2. Can you do a competition that gets people trying out your product first? Q3. Think about your target audience. What is a prize they would value? Q4. Like Mercedes you could recruit bloggers/influencers via social media and get them blogging about your…

You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashers, flopsicles, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashers increases by 10%, the quantity of flopsicles sold decreases by 26% and the quantity of cannies sold increases by 14%. Your job is to use the cross-price elasticity between splishy splashers and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the…

Economics Two players are bargaining over a three period bargaining model as discussed in class with player 1 making offers in rounds 1 and 3. Player 2 makes an offer in round 2 only. Each player has a common discount factor delta. The two players are bargaining to split $20. They have three time periods available to them for their bargaining game. At the end of round 3, if no agreement has been reached then player 1 receives $2 and player 2 receives $1 and the rest of the money is destroyed. Find the subgame perfect Nash equilibrium outcome in the finite horizon model in which the game ends after period 3.

Two athletes of equal ability are competing for a prize of $12,000. Each is deciding whether to take a dangerous performance-enhancing drug. If one athlete takes the drug and the other does not, the one who takes the drug wins the prize. If both or neither take the drug, they tie and split the prize. Taking the drug imposes health risks that are equivalent to a loss of XX dollars. Complete the following payoff matrix describing the decisions the athletes face. Enter Player One's payoff on the left in each situation, Player Two's on the right.   Player Two's Decision Take Drug Don't Take Drug Player One's Decision Take Drug     ,          ,      Don't Take Drug     ,          ,        True or False: The Nash equilibrium is taking the drug if X is greater than $6,000. True   False     Suppose there was a way to make the drug safer (that is, have lower XX). Which of the following statements are true about the effects of making the drug safer? Check all that…

Two neighborhood kids can play at home or walk to a nearby park. Playing with their toys yields some happiness. However, they would enjoy playing with the other kid at the park even more at the park. But each has a concern that if they go the park the other will not show up. This is an interesting game or situation because neither kid has an incentive to betray the other and not show up, but each kid fears walking to the park and having no one to play with. They also have to fear that if the other kid thinks they won't show up, that other kid will won't show up. All this strategic thinking is a lot for kids to take in. Here is the payoff matrix: Kid 1 Toys at Home Park Toys at Home Kid 2 Park How many Nash equilbria are there? 1,2,3 or 4 There is an option to let Kid 1 move first, but no option for Kid 2 to move first. Should Kid 2 let Kid 1 move first. Yes or No Blank # 1 Blank # 2

Bargaining Two players bargain over $20. They proceed as follows. Player 1 first proposes a split(n; 20-n); where n is an integer in {0, 1,.... 20 }. Player 2 can either accept or reject this proposal. If player 1 accepts it, player 1 obtains $n and player 2 obtains $(20-n)  If player 2 rejects it, the money is taken away from them and both players will get $0 1. Find two subgame perfect Nash equilibria of this game and state clearly each player's equilibrium strategies (recall that in a dynamic game, a player's strategy is a complete-contingent plan). Explain why the strategy profiles form a subgame perfect equilibrium. 2. Find one Nash equilibrium that is not a subgame perfect Nash equilibrium. Explain why it is a Nash equilibrium and why it is not subgame perfect.

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3.4 Bernie and Leona were arrested for money laundering and were interrogated separately by the police. Bernie and Leona were each presented with the following independent offers. If one confesses and the other doesn't, the one who confesses will go free and the other will receive a 20-year prison sentence; if both confess, each will receive a 10-year prison sentence. Bernie and Leona both know that without any confessions, the police only have enough evidence to convict them of the lesser crime of tax evasion, and each would then receive a 2-year prison sentence. a. Use the information to construct a payoff matrix for Bernie and Leona. b. What is the dominant strategy for Bernie and for Leona? Why? c. Based on your response to the previous question, what prison sentence will each receive?

Exercise 6.2. If the companies that make up a duopoly agreed on the amount they are most interested in offering to the market, what amount would they choose? Why? If, on the other hand, each of the companies acted on its own, would they produce between the two a greater or lesser amount than in the previous situation? Graphically represent and explain your answers.

Suppose you are playing a game in which you and one other person each picks a number between 1 and 100, with the person closest to some randomly selected number between 1 and 100 winning the jackpot. (Ask your instructor to fund the jackpot.) Your opponent picks first. What number do you expect her to choose? Why? What number would you then pick? Why are the two numbers so close? How might this example relate to why Home Depot and Lowes, Walgreens and Rite-Aid, McDonald’s and Burger King, and other major pairs of rivals locate so close to each other in many well-defined geographical markets that are large enough for both firms to be profitable?

Suppose the sneaker industry is an oligopoly with two competing firms, Velocity and Laces. There is some product differentiation, as Velocity produces mostly athletic sneakers, while Laces focuses more on casual sneakers for everyday wear. The graph below represents these companies' competition using the Bertrand model with differentiated products. Laces price (P) 50 30 30 30 Velocity price (P) Velocity best response c. lower prices d. raise prices Laces best response Refer to Figure 13-2. Increasing product differentiation between Velocity and Laces allows them both to without losing many customers to the other. O a. raises quantity b. lower quantity

Explain the following   In the manager-employee game (work-shirk), why manager and employee would play a mixed strategy? What happens if one of them plays a pure strategy? In two player’s dynamic games the player who moves second gets the advantage because we solve the game backwards. Explain why or why not? In dynamic game theory, a situation where a player is using non-credible threat is an examples of subgame perfect Nash equilibrium, explain why or why not?

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a. You are sitting at the dinner table with your five-year-old daughter. She is refusing to eat her vegetables, and you explain to her that failure to eat her vegetables will result in no dessert. This scenario interaction. involves does not involve a strategic b. You are a U.S. senator from Tennessee. One of your colleagues has proposed a bill that will increase the tax on cigarettes to help pay for health care for lower income families. You favor the bill but are concerned that a negative response by tobacco farmers in your state will hurt your reelection chances. This scenario strategic interaction. a c. You buy a monthly subscription to Spotify. This scenario a strategic interaction. d. Economics is your favorite course, and you are trying to determine how early you need to arrive for class to secure a front-row seat. This scenario a strategic interaction.

Suppose you have $35,000 in wealth. You have the opportunity to play a game called "Big Bet/Small Bet." In this game, you first choose whether you would like to make a big bet of $15,000 of a small bet of $5,000. You then roll a fair die. If you roll a 4, 5, or 6, you win the game and earn $15,000 for the big bet or $5,000 for the small bet. If you roll a 1, 2, or 3, you lose and lose $15,000 for the big bet and $5,000 for the small bet the game Utility U₂ U₁ BEL 0 11 LATE EE ARTE Are the Small Bet and Big Bet considered fair bets? O Big Bet is fair, but Small Bet is not. No, both are not fair. Yes, both are fair. 20 OSmall Bet is fair, but Big Bet is not. G HA 1 35 D E 1 1 1 1 1 F 1 U 50 Income (thousands of dollars)

Select the term that best describes each definition listed in the following table. Definition Nash Equilibrium Dominant Strategy Collusion Tit-for-tat Strategy Payoff Matrix Prisoners' Dilemma Game A player's best choice, if it exists, regardless of his or her opponent's strategy               A strategy in which a player cooperates until the other player defects and then defects until the other player cooperates again               A set of strategies (one for each player) in which each player's strategy is the best option for that player, given the chosen strategy of the player's opponents               A visual representation of a game showing all possible strategies for each player and all potential outcomes and payoffs