Briefly explain the differences between the equilibrium concepts we discussed in game theory. What do we need to assume about people’s decision making to find equilibria?
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Briefly explain the differences between the equilibrium concepts we discussed in
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- What is game theory? How does it relate to strategic decision making? What do the phrases dominant strategy and Nash Equilibrium mean as they apply to game theory?What is the link between game theory and market structures? Which market structure is game theory more linked to?What is game theory? How can firms use game theory?
- What is the difference between macroeconomics and microeconomics? And where would game theory fall within these?Review Chapter 15, Table 15.4, Prisoner Dilemma. Suppose the game starts with both Jesse and Frank planning to “Stay Mum” in the lower right cell. Discuss how each player would evaluate the situation and decide whether to change decisions. If each player makes decisions to minimize the penalty, in which cell will this game end? Is there a Nash equilibrium?What is the nash equilibrium of the game "sticks"?
- Consider a game with two players who cannot communicate, and in which each player is asked a question. The players can answer the question honestly or lie. If both answer honestly, each receives $100. If one player answers honestly and the other lies, the liar receives $500 and the honest player gets nothing. If both lie, then each receives $50. a) Describe the strategies and payoffs of this game b) Construct the payoff matrix c) Compare this game to the prisoners' dilemma. Are the two games similar or different? Briefly explain your answer.prove that the following strategy profile is a Nash equilibrium:For any 0 < x ≤1, player 1 offers x to player 2, player 2 accepts any offer greater than orequal to x and rejects any offer smaller than x.Is this strategy profile a subgame perfect equilibrium as well? Briefly explain why.(Use the game theory concept in microeconomics) A particular situation can be explained as follow. Two employees are asked to do one of two possible tasks. The first task is particularly difficult and the reward is large. but requires both employees to work together. The second task is easier and can be done individually, but the reward is small. The emplovees are free to choose which task they want to tackle, but they must make their choice independently: no communication is allowed and they will learn their partner's choice only alter they made their own choice. (a) Write the situation in a game form. Hint: make it as simple as possible (b) What is the best strategy for each player? (c) What can you learn from the predicted best strategy of the game?
- A case study in the chapter describes a phone conversation between the presidents of American Airlines and Braniff Airways. Let's analyze the game between the two companies. Suppose that each company can charge either a high price for tickets or a low price. If one company charges $300, it cams low profit if the other company also charges $300 and high profit if the other company charges $600. On the other hand, if the company charges $600, it cams very low profit if the other company charges $300 and medium profit if the other company also charges $600. a. Draw the decision box for this game. b. What is the Nash equilibrium in this game? Explain. c. Is there an outcome that would be better than the Nash equilibrium for both airlines? How could it be achieved? Who would lose if it were achieved?How many sellers/firms is a few? How would you define “strategic decision-making?” How does game theory relate to strategic decision-making?Suppose China and the US are deciding whether to join an international agreement to mitigate climate change. The matrix below contains payoffs that represent each country’s net benefit from their decisions. Use this information to answer Question 24. CHINA USA Join Agreement Do Not Join Agreement Join Agreement (100,100) (0,125) Do Not Join Agreement (125,0) (25,25) [24] What does each country decide to do in a Nash equilibrium? AND What is the efficient outcome? Nash: Efficient: