Amazon faces the other group (Other), which consists of e-book manufacturers other than Amazon, in a game in which the players choose a format (either Amazon's format, AZW, or the other group's format, EPUB), as the profit matrix shows. What are the pure-strategy Nash equilibria if the firms choose their formats simultaneously and are free to choose either format? Is there a mixed-strategy equilibrium? Determine the pure-strategy Nash equilibria for this game. OA. The Nash equilibrium is for Amazon and the other group to select the EPUB format. OB. The Nash equilibria are for Amazon and the other group to select the same format. OC. The Nash equilibria are for Amazon and the other group to select different formats. OD. The Nash equilibrium is for Amazon and the other group to select the AZW format. O E. This game has no Nash equilibria. Determine the mixed-strategy Nash equilibrium for this game. The mixed-strategy Nash equilibrium is for Amazon to select the AZW format with probability A= and for the other group to select the AZW format with probability 0o =. (Enter your responses rounded to two decimal places.) AZW Amazon EPUB AZW 2 -4 2 + Other EPUB -4 3 -4 4

Amazon faces the other group (Other), which consists of e-book manufacturers other than Amazon, in a game in which the players choose a format (either Amazon's format, AZW, or the other group's format, EPUB), as the profit matrix shows. What are the pure-strategy Nash equilibria if the firms choose their formats simultaneously and are free to choose either format? Is there a mixed-strategy equilibrium? Determine the pure-strategy Nash equilibria for this game. OA. The Nash equilibrium is for Amazon and the other group to select the EPUB format. OB. The Nash equilibria are for Amazon and the other group to select the same format. OC. The Nash equilibria are for Amazon and the other group to select different formats. OD. The Nash equilibrium is for Amazon and the other group to select the AZW format. O E. This game has no Nash equilibria. Determine the mixed-strategy Nash equilibrium for this game. The mixed-strategy Nash equilibrium is for Amazon to select the AZW format with probability A= and for the other group to select the AZW format with probability 0o =. (Enter your responses rounded to two decimal places.) AZW Amazon EPUB AZW 2 -4 2 + Other EPUB -4 3 -4 4

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.3P

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Consider this market that is dominated by two airlines, American and United. Each can choose to charge a high price (and restrict capacity) or charge a low price (and expand capacity). If one of the airlines reduces the price and the other does not, then the airline that reduced the price can capture customers from the other airline. The profits for each outcome is shown below: a. Does United have a dominant strategy? If so, what is it? Explain. b. What is the Nash equilibrium in this game? Explain. c. Is this game an example of a Prisoner’s Dilemma? Explain.
Consider this market that is dominated by two airlines, American and United. Each can choose to charge a high price (and restrict capacity) or charge a low price (and expand capacity). If one of the airlines reduces the price and the other does not, then the airline that reduced the price can capture customers from the other airline. The profits for each outcome is shown below: a.Does United have a dominant strategy? If so, what is it? Explain. b. What is the Nash equilibrium in this game? Explain. c. Is this game an example of a Prisoner’s Dilemma? Explain.
Consider the two-player game illustrated here. a. For each player, derive those strategies which survive the iterativedeletion of strictly dominated strategies.b. Derive all strategy pairs that are Nash equilibria.
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