Three friends Linda, Stella, and Lea-are deciding where to go together for vacation. They all agree that they should go one of the three places: Greece, Mexico, or Hawaii. They also agree that they will have two pairwise votes to determine where to go on vacation, with the majority determining the outcome on each vote. The first, second, and third choices for each person are as indicated in the following table. First choice Second choice Third choice Linda Greece Mexico Hawaii Stella Mexico Hawaii Greece Lea Hawaii Greece Mexico Refer to Table 22-1. Depending on the order of the pairwise voting, the friends could go to either

Three friends Linda, Stella, and Lea-are deciding where to go together for vacation. They all agree that they should go one of the three places: Greece, Mexico, or Hawaii. They also agree that they will have two pairwise votes to determine where to go on vacation, with the majority determining the outcome on each vote. The first, second, and third choices for each person are as indicated in the following table. First choice Second choice Third choice Linda Greece Mexico Hawaii Stella Mexico Hawaii Greece Lea Hawaii Greece Mexico Refer to Table 22-1. Depending on the order of the pairwise voting, the friends could go to either

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.15P

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Table 22-10Three family members -- Seamus, Maeve, and Siobhan -- are deciding what type of movie to attend. The three choices are an action adventure, comedy, or horror. The first, second, and third choices for each person are as indicated in the table below. Seamus Maeve Siobhan First Choice Comedy Action Horror Second Choice Horror Horror Comedy Third Choice Action Comedy Action Refer to Table 22-10. If the voting method is a Borda count, which alternative will be chosen? a. Comedy b. Action c. Horror d. None of the above is correct; a Borda count fails to produce a winner in this instance.
Cameron and Luke are playing a game called ”Race to 10”. Cameron goes first, and the players take turns choosing either 1 or 2. In each turn, they add the new number to a running total. The player who brings the total to exactly 10 wins the game. a) If both Cameron and Luke play optimally, who will win the game? Does the game have a first-mover advantage or a second-mover advantage? b) Suppose the game is modified to ”Race to 11” (i.e, the player who reaches 11 first wins). Who will win the game if both players play their optimal strategies? What if the game is ”Race to 12”? Does the result change? c) Consider the general version of the game called ”Race to n,” where n is a positive integer greater than 0. What are the conditions on n such that the game has a first mover advantage? What are the conditions on n such that the game has a second mover advantage?
Suppose there are only five people in a society and each favors one of the five highway construction options in Table 16.2 (include no highway construction as one of the options). Explain which of these highway options will be selected using a majority paired-choice vote. Will this option be the optimal size of the project from an economic perspective?
A game is played as follows: First Player 1 decides (Y or N) whether or not to play.If she chooses N, the game ends. If she chooses Y, then Player 2 decides (Y or N) whetheror not to play. If he chooses N the game ends. If he chooses Y, then they go ahead and playanother game with the payoffs shown below. A player who opts out by choosing N gets 2 andthe other player gets 0. Draw the tree of this game and then find the two subgame-perfect Nashequilibria.
Tversky and Kahneman asked 72 respondents to choosebetween lottery 1 and lottery 2 and lottery 3 and lottery 4.Lottery 1: A .001 chance at winning $5,000 and a.999 chance of winning $0Lottery 2: A sure gain of $5Lottery 3: A .001 chance of losing $5,000 and a .999 chance of losing $0Lottery 4: A sure loss of $5More than 75% of all participants preferred lottery 1 tolottery 2 and lottery 4 to lottery 3. a Which choices would be made by a risk-averse deci-sion maker? b Which choices would be made by a risk-seeking de-cision maker? c How does the observed behavior of the participantscontradict expected utility maximization?d How does prospect theory resolve the contradiction?
Nn3 Suppose an incumbent monopoly firm currently earns a profit of $50,000 per period. A potential entrant could enter and make a profit of $15,000 per period while also lowering the incumbent’s profit to $20,000 per period. The monopoly firm could seek to engage in predatory pricing, which would lead to both firms earning a loss of $5,000 per period. (a) Is there a Nash Equilibrium in this game? If so, what is it? (b) Discuss how this game might play out in the real world?
. On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according to thefunctionU (c, b) = 20c - c2 +18b- 3b2.How many cigars and glasses of brandy does he consume during an evening? (Cost is no objectto J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum of glasses ofbrandy and cigars consumed to 5. How many glasses of brandy and cigars will he consumeunder these circumstances?
There are N women that all share the same toilet every day in an office building. Each sits on the toilet to use it and must decide whether to put down toilet paper on top of the toilet or sit directly on it. The toilet is cleaned just once a day at a random time and no one knows when this is done. It takes time and effort to put down toilet paper so if she knew the toilet was clean (either because she is the first to use it after it was cleaned or if all previous users after it was last cleaned put down toilet paper) she would rather not put down toilet paper. However, if she believes the toilet is dirty she would rather put down toilet paper. a) Is this game best described as simultaneous or sequential move? b) How many equilibria are there in this game? c) Briefly provide a general description of the equilibria. Which equilibrium/equilibria provide the highest social payoff?
There is an election with three candidates: Lady Left (LL). Care Central (CC), and Robert Right (RR). The following are the outcomes in various two- and three-way races: CC. 100%. RR, 0% /LL, 0%. CC/ 100% RR, 51%, LL, 49% RR, 35%. LU 33% CC 329 The voting system is such that first there is a three way race. Then, if none of the three candidates wins more than 50% of the votes, there is a two-way runoff election between the two can Is this voting system consistent? Explain which property of consistency is violated, if any. Short answer
18. Choose the correct answer from the given below.
Q. 1 You are the mayor of a small town with 2000 residents. The head of your economic development agency recently conducted a survey in which the 2000 residents said that a public concert in the centre of town would be worth $20 to cach of them. Since it costs only $5000 to hold the concert, you organized and held the concert, which everyone in town enjoyed. But when you asked for donations to pay for the concert, you only collected $30 in total. What do you know? a. The survey certainly overstated how much the concert was worth to each resident. b. From the standpoint of total costs and benefits, the cost of the concert certainly exceceded the benefit. c. The concert was an example of the Tragedy of the Commons. d. Residents of the town were probably free riders.
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