For the operating system game, let us assume Windows is more superior than Mac intrinsically and that network effects are stronger for Macs. These modifications are reflected in different payoffs. Now, the payoffs from adopting Windows is 30 + 10 × w and from adopting Mac is 20 × m. n consumers are simultaneously deciding between Windows and Mac, where n > 10. (a) Is there a Nash equilibrium in which everyone buys Windows? Explain your answer. (b) Is there a Nash equilibrium in which everyone buys Mac? Explain your answer. (c) Is there a Nash equilibrium in which some consumers buy Windows and some consumers buy Mac? Explain your answer.
For the operating system game, let us assume Windows is more superior than Mac intrinsically and that network effects are stronger for Macs. These modifications are reflected in different payoffs. Now, the payoffs from adopting Windows is 30 + 10 × w and from adopting Mac is 20 × m. n consumers are simultaneously deciding between Windows and Mac, where n > 10. (a) Is there a Nash equilibrium in which everyone buys Windows? Explain your answer. (b) Is there a Nash equilibrium in which everyone buys Mac? Explain your answer. (c) Is there a Nash equilibrium in which some consumers buy Windows and some consumers buy Mac? Explain your answer.
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.4P
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For the operating system game, let us assume Windows is more superior than Mac intrinsically and that network effects are stronger for Macs. These modifications are reflected in different payoffs. Now, the payoffs from adopting Windows is 30 + 10 × w and from adopting Mac is 20 × m. n consumers are simultaneously deciding between Windows and Mac, where n > 10.
(a) Is there a Nash equilibrium in which everyone buys Windows? Explain your answer.
(b) Is there a Nash equilibrium in which everyone buys Mac? Explain your answer.
(c) Is there a Nash equilibrium in which some consumers buy Windows and some consumers buy Mac? Explain your answer.
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