5 7. For the Iraq War game in Figure 2.11, write down the strategy sets for thethree players. FIGURE 2.11 Iraq War and WMD. The Abbreviations W and NW Represent War and No War, RespectivelyThe abbreviations W and NW represent War and No War, respectively.IraqNO WMDWMDUNDo notDo notInspectinspectInspectin spect(IraqUSIraqDenyDenyAllow &hideAllowWarNo warWarNo warAllowIIUSIV USUSWarNo warWarNo warNWNWNWIraq 111921071214413UN10111413173941228US145127136.91041182

A pure strategy refers to strategies in game theory. Each and every player is given a set of…

Answered: The abbreviations W and NW represent…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter13: Between Competition And Monopoly

Section: Chapter Questions

Problem 10DQ

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Imagine that two firms in two different countries want to bring a new product to market. Due to economies of scale, if both firms do this, they will both lose £50 million. But if only one firm does this, it will gain £300 million. (a) What is the best strategy for firm A, if firm B has not yet entered the market, and why? (b) Illustrate this with a game theory diagram, showing appropriate payouts. (c) What is the welfare-maximising strategy for a government, and why?
Imagine that two firms in two different countries want to bring a new product tomarket. Due to economies of scale, if both firms do this, they will both lose £50million. But if only one firm does this, it will gain £300 million.(a) What is the best strategy for firm A, if firm B has not yet entered the market, andwhy?(b) Illustrate this with a game theory diagram, showing appropriate payouts.(c) What is the welfare-maximising strategy for a government, and why?
1. Define Dominant Strategy and Dominant equilibrium in Game theory? 2. Do we depict the equilibrium of a game in pay-offs or strategies in Game theory?
8 Please use the game theory matrix to answer the following question We have 110,000 Homes • The low price is $79.95 and the high price is 10% more • Set up fees of $49.50 + $6.50 per subscriber The company's profit is based on its price and its competitor’s price: What is the contribution margin per house in each scenario? *Contribution margin = Price – total costs
Again consider an extension of the Stag Hunt game. There are N = 3 hunters. This time each hunter has multiple effort levels in hunting for stag. Specifically, assume each hunter i can choose effort level ei = 0, 1, 2, 3, 4. Given a strategy profile (e1, e2, e3), each player i 0 s payoff = 2 min{e1, e2, e3} − ei . In words, payoff equals twice of the least effort level of everyone subtract player i’s own effort level. For example, if player 3 chooses e3 = 1, players 1 and 2 both choose effort level 4 then the minimum effort level min{e1, e2, e3} = 1, so player 3’s payoff equals 2 × 1 − e3 = 1 and players 1 and 2 each gets payoff 2 × 1 − 4 = −2. a. Is a strategy profile in which all players choose the same effort level a Nash equilibrium? Explain. (Consider what a player’s payoff is given this profile and what payoff he could get by increasing or decreasing his effort.) b. Is any profile in which not all effort levels are equal a Nash equilibrium? Explain.
12.3 Armed Conflict: Consider the following strategic situation: Two rival armies plan to seize a disputed territory. Each army's general can choose either to attack (A) or to not attack (N). In addition, each army is either strong (S) or weak (W) with equal probability, and the realizations for each army are independent. Furthermore the type of each army is known only to that army's general. An army can capture the territory if either (i) it attacks and its rival does not or (ii) it and its rival attack, but it is strong and the rival is weak. If both attack and are of equal strength then neither captures the territory. As for payoffs, the territory is worth m if captured and each army has a cost of fighting equal to s if it is strong and w if it is weak, where s <w. If an army attacks but its rival does not, no costs are borne by either side. Identify all 12.7 Exercises • 267 the pure-strategy Bayesian Nash equilibria of this game for the following two cases, and briefly describe…
7. A farmer can either invest in irrigation for their farm or not. There's a 30% chance that they will receive adequate rain such that the irrigation is not necessary, and a 70% chance that the irrigation will be useful if acquired. Assume that the farmer will receive $5,000 if their crops are adequately watered, and $1,000 otherwise. Irrigation costs $3,000. For simplicity, assume this is a one-off game and that nature is not perverse.a. Draw the extensive form of this game, with the farmer acting first and nature second.b. What is the expected value of each strategy for the farmer?c. What is the expected value of perfect information on the weather?
Economics: Industrial Economics Question: 1 Consider the following simultaneous move game: Player 1 selects rows and player 2 selects columns in a simultaneous move game. For every outcome, payoffs for player 1 are given by the first entry and payoffs for player 2 by the second. P1\P2 | A | B | C | D | 1 | (5,5) | (7,4) | (7,5) | (1,2) | 2 | (7,2) | (7,3) | (5,1) | (2,3) | 3 | (1,2) | (6,9) | (8,0) | (8,8) | The Nash Equilibrium is: Choices: A. (2,B) B. (3,D) C. (3,B) D. (1,C) Question: 2 In the patent pooling model, if there are four inputs that are required for production of the final goods and each one is produced by a patent-holding monopolist then 1. At the Nash Equilibrium the Lerner Index for the industry isChoices: A. Half as high as the Lerner index that would arise...B. Twice as high as the Lerner Index that would arise...C. Four times higher than the Lerner Index that we...D. Four times lower than the Lerner Index that we... 2. If the market for the final good were a…
Answer all the questions, show all the working. Consider the following game in normal form. Not cooperate Cooperate Not cooperate 20,20 50,0 Cooperate 0,50 40,40 What is Nash equilibrium? Is it efficient? Why? What needs to be complied with so that the players would like to cooperate? What happens when one of the players does not cooperate? Why? Define trigger strategy. Calculate the discount factor (δ) that would make both players decide to cooperate.
1) Suppose that Player A can take two actions, either Up or Down. Player A is thinking to choose Up 50 percent of the time, and Down 50 percent of the time. This type of strategy is called a ____ ? 2) Consider a payoff matrix of a game shown below. In each cell, the number on the left is a payoff for Player A and the number on the right is a payoff for Player B. In order for (Down, Right) to be a unique pure strategy Nash equilibrium, a must be (greater, or smaller) than 3 and b must be (greater, or smaller) than 3. refer to image
1. With nash equilibrium, do you always choose the optimal strategy? 2. Can a game have more than one nash equilibrium?
a) At what value for d is Kia indifferent between keeping the agreement and cheating?b) At what value for d is Hyundai indifferent between keeping the agreement and cheating?c) What is the minimum value of d for a Nash equilibrium of cooperation?

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