Suppose we’ve modelled a firm’s entry decision with a one-shot, simultaneous move game, determined payoffs and found the Nash equilibrium. Suppose with the payoffs we came up with, both firms have a clear dominant strategy such that there is a Nash equilibrium in which both firms play their dominant strategy. However, when we observe the actual actions of the firms, we see that they don’t choose the strategy wepredicted and the outcome of the game doesn’t match the Nash equilibrium. What are 4 reasons this might be? (Hint: The firms are rational.)

Q: In the following payoff matrix, each firm has two possible strategies, and must move simultaneously.…

A: The Nash equilibrium is a theorem of decision-making which in turn states that a player could…

Q: There are two firms in an industry, Firm A and Firm B. If firm A and firm B both advertise, they…

A: Nash equilibrium is one in which both the players are playing the strategy that maximizes their own…

Q: In the game shown below, Players 1 and 2 are competing over how to divide up $100. Each player must…

A:

Q: Consider two firms that are choosing the price of competing products. The choices are contained in…

A: In game theory, a Nash equilibrium is an optimal outcome and the players have no incentive to…

Q: Two oligopolistic aluminium manufacturers are engaged in bitter competition with one another. Both…

A: An oligopoly is type of market with a few sellers and a large number of buyers. The sellers compete…

Q: Consider the normal-form game bellow where x > 0. a) For what values of x do both firms have a…

A: The dominant strategy can be referred as a strategy for the player that is the best response to all…

Q: In the following game, Player 1 makes a low bid or high bid, and Player 2 reacts in an easygoing or…

A: The correct option is b) High and Easy in both rounds.

Q: A two-person game in which each person has access to only two possible strategies will have at most…

A: Answer: A two-person game in which each persona has access to only two strategies can have more than…

Q: Firm A: High Price A: $6 В: $6 Low Price A: $8 High Price B: -$2 Firm B: A: -$2 B: $8 A: $0 B: $0…

A: Cartel agreement is the aggregate between firms to charge a certain price.

Q: Consider the following three player game, recaling that a strategy profile (A, B, B), for example,…

A: The ideal conclusion of a game is where there is no incentive to depart from the beginning strategy,…

Q: Suppose that two players are bargaining over the distribution of $1,000 in which payoffs must be in…

A: Yes, this game have a Nash equilibrium. Any combination of bids (a, b) where ‘a’ is the bid of…

Q: Suppose that two firms, firm A and firm B, are competing in the market. Assume that each firm has…

A: This pay-off matrix shows the normal form game of both the players along with their strategies.

Q: Suppose that you and a friend play a matching pennies game in which each of you uncovers a penny. If…

A: Nash equilibrium is an idea inside game hypothesis where the ideal result of a game is in the same…

Q: The following information regarding the outcome of choices between two firms is provided as follows:…

A: Under dominance strategy or dominance one strategy adopted is better than the other strategy for one…

Q: We consider the following three-player strategic form game, where Alice's strategies are U, C, and…

A: Nash Equilibrium is defined as a concept of game theory where a player cannot deviate from his…

Q: In the game depicted below, firms 1 and 2 must independently (no collusion) decide whether to charge…

A: a. Be that any firm who takes the first choice would chose High price to maximize their pay-off. The…

Q: Provide an example of a matrix game for which there is a weakly dominant strategy equilibrium. as…

A: A weak dominant strategy refers to the strategy that results in at least the same utility for all…

Q: Suppose we have two ice cream sellers, Blue Cool Ice Cream and Red Mango Ice Cream, deciding where…

A: We are going to learn the process about iterated dominance equilibrium to answer this question.

Q: Suppose we’ve modelled a firm’s entry decision with a one-shot, simultaneous move game, determined…

A: The dominant strategy is the strategy of the firm which pays the better outcome to the firm…

Q: Two companies have to choose their prices at the same time, at either high (pH) or low (pL) levels.…

A: Nash equilibrium refers to the solution or best outcome of a specific game when using game theory to…

Q: Two competing firms must choose their quantity of production simultaneously. Each firm can choose…

A: Answer: Given, High quantity= 3 Low quantity= 2 Price of both firms= 9- Q,  where Q is the sum of…

Q: Two oligopolistic aluminium manufacturers are engaged in bitter competition with one another. Both…

A: Here in this example BAG and LAG both jave the dominance startegy over others strategy . Nash…

Q: Suppose Carlos and Deborah are playing a game in which both must simultaneously choose the action…

A: ANSWER STEP-1 When Carlos chooses Left. Deborah chooses right gives payoff of 4 which is higher than…

Q: Define a dominant strategy and Nash equilibrium. Can two firms interacting with each other have no…

A: In a game, optimal results can only be obtained if there is no incentive to deviate from the initial…

Q: Consider the strategic form game represented by the following bimatrix, where player 1 is the row…

A: The given matrix is:

Q: This table shows a game played between two firms, Firm A and Firm B. In this game each firm must…

A: Matrix games are two player zero-sum games with finite strategy sets. Matrix games are interesting…

Q: In the game shown below, Player 1 can move Up or Down, and Player 2 can move Left or Right. The…

A: Given date , In the game shown below ,Player 1 can move up or down, and player 2 can move left or…

Q: Suppose we have two ice cream sellers, Blue Cool Ice Cream and Red Mango Ice Cream, deciding where…

A: In a situation where two players are at a position where is no one has any need/incentive to…

Q: Consider the game matrix given here: a. If (T,L) is a dominant strategy equilibrium, then what…

A: Dominant strategy is such a strategy that a player chooses every time, no matter what strategy other…

Q: Pfizer and a competitor, Astra-Zeneca, are considering developing a new drug for a particular…

A:

Q: Consider the Nash Bargaining game. There are 2 players who have to decide how to split one dollar.…

A: The Nash equilibrium is the point at which both participants' dominant strategies are in balance and…

Q: Consider two firms that are choosing the price of competing products. The choices are contained in…

A: Dominated strategy : it is the strategy that gives minimum payoff to a player compared to his other…

Q: Consider the game matrix given here: a. If (T, L) is a dominant strategy equilibrium, then what…

A: Meaning of Decision Theory under Nash Equilibrium: Under decision theory, it is a systematic…

Q: Suppose we have two ice cream sellers, Blue Cool Ice Cream and Red Mango Ice Cream, deciding where…

A: We are going to use weakly dominant and strictly dominant methodology to answer this question,

Q: Imagine that there are two snowboard manufacturers (FatSki and WideBoard) in the market. Each firm…

A: Disclaimer: Since you have posted a multi-part question, I am providing you with the answers to the…

Q: Which of the following statements about the classic Cournot duopoly model is incorrect?     1)The…

A: Oligopoly market structure is the market structure in which there are few large firms in the market…

Q: Suppose there are only two firms that sell smartphones, Flashfone and Pictech. The payoff matrix…

A: Given; 1) If Flashfone prices high, Pictech will make more profit if it chooses a low price.…

Q: Two firms, Tim Horbucks and Startons, consider enter the market for take-out coffee, or not. The…

A: Given information: Fixed cost of production = F The profit when both enters the market = 400 - F for…

Q: Which of the following accurately describes a player's strictly dominant strategy? It is a strategy…

A: The game theory is a branch of economics which tries to understand the behaviors of the market…

Q: Suppose we have two ice cream sellers, Blue Cool Ice Cream and Red Mango Ice Cream, deciding where…

A: A game strategy is said to be dominated when the strategy taken by the player is not giving the…

Q: Find the Nash equilibria for this game, assuming that both firms make their decisions at the same…

A: Part a) There is two Nash equilibria i.e., (laptop,phone) and ( phone , laptop ). The payoff for…

Q: Refer to the normal-form game of price competition in the payoff matrix below       Firm B Low…

A: In game theory, the normal form is a portrayal of a game. Not at all like broad form, normal-form…

Q: Player 1 and player 2 are playing a simultaneous-move one-shot game, where player 1 can move "up" or…

A: A game in which players can randomly choose a particular action with a certain probability is called…

Q: Consider the following three-stage duopoly game. There are two firms in the market: Firm 1 and Firm…

A: Under a duopoly model, one of the player moves, and after viewing the first player, the second…

Q: Imagine two vendors (our players) who must simultaneously choose a location to position their…

A: Location game is the concept of the game theory where n number of players choose the location for…

Q: FIRM A Compete Produce 35m Collude Produce 20m A: $200m profits A: $300 profits Collude Produce 30m…

A: Answer: Correct option: option 2 (both firms will compete) Explanation: To find the outcome of this…