ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
14th Edition
ISBN: 9781337912396
Author: Baumol
Publisher: CENGAGE L
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Chapter 13, Problem 2TY
To determine
Find out the dominant strategy.
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Students have asked these similar questions
Use the information in the following table, which summarizes the payoffs (i.e., profit) to two firms that must decide between an average-quality and a high quality product, to answer the questions that follow:
Firm 2
Average Quality
High Quality
Firm 1
Average Quality
600, 600
400, 1100
High Quality
1100, 400
900, 900
a. What is each player's dominant strategy? Explain your reasoning.b. Referring to the table above, is this an example of a prisoner's dilemma game? Why or why not?c. Is there a Nash equilibrium? If so, what is it?
Consider the following normal form representation of the standard competition between firm A and
firm B. Each firm can choose either standard A or standard B. Their payoffs are given as follows:
Firm B
A
В
A
Firm A
В
1
1
3
1
(1) (10 points) What's Nash equilibrium (NE) in this game? If there are more than one, find them
all. But there is no NE, state that there is no NE.
(2) (10 points) If you find a NE (or multiple Nash equilibria), is it (or are they) Pareto efficient?
What is the difference between Dominant strategy and mixed strategy? Please explain
Chapter 13 Solutions
ECONOMICS:PRIN.+POLICY-MINDTAP (1 TERM)
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