MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Question
Chapter 13, Problem 3CACQ
a.
To determine
To explain: The maximum amount player 1 should be willing to pay for the opportunity to move first instead of moving at the same speed as player 2.
b.
To determine
To explain: The maximum amount player 2 should be willing to pay to keep player 1 from getting to move first.
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Students have asked these similar questions
Suppose Carlos and Deborah are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Carlos chooses Right and Deborah chooses Right, Carlos will receive a payoff of 6 and Deborah will receive a payoff of 5.
Deborah
Left
Right
Carlos
Left
8, 4
4, 5
Right
5, 4
6, 5
The only dominant strategy in this game is for to choose .
The outcome reflecting the unique Nash equilibrium in this game is as follows: Carlos chooses and Deborah chooses .
Consider the following simultaneous move game:
Player 1
Strategy
Yes
No
Player 2
Yes
400, 400
600, 500
No
200, 375
300, 525
a. What is the maximum amount Player 1 should be willing to pay for the opportunity to move first instead of moving at the same time
as Player 2?
b. What is the maximum amount Player 2 should be willing to spend to keep Player 1 from getting to move first?
Is the solution to the prisoner’s dilemma game a Nash equilibrium? Why?
The solution to the prisoner’s dilemma game is a Nash equilibrium because no player can improve his or her payoff by changing strategy unilaterally.
The solution to the prisoner’s dilemma game is not a Nash equilibrium because players do not end up in the best combination for both.
The solution to the prisoner’s dilemma game is not a Nash equilibrium because both players can improve their payoffs by cooperating.
The solution to the prisoner’s dilemma game is a Nash equilibrium because it is a noncooperative game in which both players have to expect that the other is purely selfish.
Chapter 13 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
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