answer the following questions regarding the matrix below, which represents the strategic nteraction between the two largest movie production studios, Universal Pictures and 20th Century ox. They are each deciding the release dates for their own summer blockbuster action movies. They can release their movies in June, July, or August. Because of limited demand for going to the novies, each firm would generally rather release their movies earlier than later. Similarly, they would rather not release their movies at the same time, as it dilutes the demand for their movies. The matrix form of the game is as follows: Universal June July August June 5,5 4,6 7,8 Fox July 6,4 5,5 4,6 August 8,6 6,5 5,4 ) Suppose Universal and Fox make their decisions simultaneously. Are there any Nash equilibria? If so, what are they? Show your work. ) Suppose they move sequentially, and that Fox moves first. First set up the game tree. What will be the equilibrium path of the subgame perfect Nash equilibrium outcome? Would Fox want this to happen? Explain intuitively why or why not.

answer the following questions regarding the matrix below, which represents the strategic nteraction between the two largest movie production studios, Universal Pictures and 20th Century ox. They are each deciding the release dates for their own summer blockbuster action movies. They can release their movies in June, July, or August. Because of limited demand for going to the novies, each firm would generally rather release their movies earlier than later. Similarly, they would rather not release their movies at the same time, as it dilutes the demand for their movies. The matrix form of the game is as follows: Universal June July August June 5,5 4,6 7,8 Fox July 6,4 5,5 4,6 August 8,6 6,5 5,4 ) Suppose Universal and Fox make their decisions simultaneously. Are there any Nash equilibria? If so, what are they? Show your work. ) Suppose they move sequentially, and that Fox moves first. First set up the game tree. What will be the equilibrium path of the subgame perfect Nash equilibrium outcome? Would Fox want this to happen? Explain intuitively why or why not.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 3MC

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Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard equipment on all models. Side-impact airbags raise the price of each automobile by $1,000. If both firms make side-impact airbags standard equipment, each company will earn profits of $0.5 billion. If neither company adopts the side-impact airbag technology, each company will earn $1.5 billion. If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $2 billion and the other company will earn $-1 billion.If you were a decision maker at Honda, would you make side-impact airbags standard equipment?multiple choice 1 There is not enough information to answer the question. No Yes If Toyota and Honda were able to cooperate, would you expect this same outcome?multiple choice 2 Yes No There is not enough information to answer the question.
Suppose Toyota and Honda must decide whether to make a new kind of side-impact airbags standard equipment on all models. Side impact-airbags raise the price of each automobile by $1000. If both firms make side-impact airbags standard equipment, each company will earn profits of $2.5 billion. If neither company adopts the side-impact airbag technology, each company will earn $1 billion (due to lost sales to other automakers). If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $3 billion and the other company will lose $1.5 billion. If you were a decision maker at Honda, would you make side-impact airbags standard equipment?
q19 If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. If you and your rival plan to be in business for 10 years, then the Nash equilibrium is a. for each firm to not advertise in any year. b. for neither firm to advertise in early years but to advertise in later years. c. for each firm to advertise every year. d. for each firm to advertise in early years but not advertise in later years.
Construct the sequential game tree when Cable-net takes the first mover position by deciding whether to invest in infrastructure capacity expansion. Find the Nash equilibrium path by using the roll-back technique. How much profit does each firm earn? (Hint: the game tree will have three sequential decisions: Cable-net makes the decision first whether to invest in infrastructure capacity expansion, Peoplenet makes the entry decision, and Cable-net decides whether to lower the price.)
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Suppose that two companies – AlphaTech and BetaLabs – are competing for market share and must simultaneously decide whether to develop a new product. Both companies are reluctant to make a decision as it is only economical for one company to develop a new product. Each company earns nothing if they decide not to develop a new product. One company can earn $50 million by developing a new product only if their competitor does not. If both companies decide to develop a new product, they each lose $10 million. Complete the payoff matrix to represent this game. Based on your solution in part (a), determine the maximin solution.
Suppose that the pricing strategies for FiberOne and of Starlink are shown in the table below. They have to decide whether to charge a high or low price for their internet service. The four pairs of payoff values show what each company expects to earn or lose in millions of dollars, depending on what the other company does.FiberOne’s Price StrategyStarlink’s Price StrategyHigh Price Low PriceHigh Price Starlink+$200 FiberOne +$200 Starlink+$500 FiberOne - $100Low Price Starlink-$100 FiberOne + 500 Starlink+$100 FiberOne +$100If it’s expected that the incomes of people living in rural Nigeria is expected to increase, what will the equilibrium outcome be, ceteris paribus?a) a) Starlink will charge a low price; FiberOne will charge a high price.b) b) Starlink will charge a high price; FiberOne will charge a low price.c) c) Both Starlink and FiberOne will charge a low price.d) d) Both Starlink and FiberOne will charge a high price.
In the market for video game consoles, Microsoft and Sony are essentially a duopoly, with Nintendo at a distant third. Consider a purely hypothetical game in which the executives of the two companies are deciding how much they will spend on advertising. To simplify, assume that they can either spend a lot or spend a little. If both firms spend a lot, Sony's hypothetical profit will be $2 billion and Microsoft's hypothetical profit will be $1 billion. If they both spend a little, Sony's profit will be $9 billion and Microsoft's profit will be $7 billion. If Sony spends a lot and Microsoft spends a little, Sony's profit will be $8 billion and Microsoft's profit will be $2 billion. Finally, if Sony spends a little and Microsoft spends a lot, Sony's profit will be $3 billion and Microsoft's profit will be $6 billion. Create the payoff matrix for this game. Does Sony have a dominant strategy? If so, what is it? Does Microsoft have a dominant strategy? If so, what is…
Suppose Telkomsel and Indosat are the only two firms in the internet market. They face the following payoff when the want to invest in the research budget: When both companies invest in small budget, Telkomsel will gain Rp 40 billion and Indosat will gain Rp 50 billion. When both of them invest in large budget, Telkomsel will gain Rp 20 billion and Indosat will gain Rp 30 billion. When Telkomsel invest in large budget and Indosat in small budget, Telkomsel will gain Rp 30 billion and Indosat will gain zero. When Telkomsel invest in small budget and Indosat in large budget, Telkomsel will gain zero and Indosat will gain Rp 70 billion. a). Draw the payoff matrix b). Is there a Nash Equilibrium for that case? Explain.
To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Dairy King Advertise Doesn't Advertise Creamland Advertise 10, 10 18, 2 Doesn't Advertise 2, 18 11, 11 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $18 million, and Dairy King will make a profit of $2 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of _________ million if Dairy King advertises and a profit of ________ million if Dairy King does not advertise. If Creamland decides not to advertise, it will earn a profit of __________ million if Dairy King advertises and a profit of _________…
Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Beantown Advertise Doesn't Advertise Expresso Advertise 8, 8 15, 2 Doesn't Advertise 2, 15 11, 11 For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms. If Expresso decides to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Expresso decides not to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Beantown advertises, Expresso makes a higher profit if…