ECONOMICS-W/MYECONLAB
7th Edition
ISBN: 9780134833125
Author: Hubbard
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 14, Problem 14.2.8PA
To determine
Whether the prisoner's dilemma is realist or unrealistic.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Consider a game with two players who cannot communicate, and in which each player is asked a question. The players can answer the question honestly or lie. If both answer honestly, each receives $100. If one player answers honestly and the other lies, the liar receives $500 and the honest player gets nothing. If both lie, then each receives $50.
a) Describe the strategies and payoffs of this game
b) Construct the payoff matrix
c) Compare this game to the prisoners' dilemma. Are the two games similar or different? Briefly explain your answer.
Burger King has introduced new strategy by reducing the price of its Whopper by 75 percent if customers also purchased french fries and a soft drink. Nevertheless, the sales dropped within two weeks. Based on your knowledge on game theory, what do you think had happened?
The Edge magazine columnist, Jack Sparrow reported the recent findings of two academic political scientists. These scholars found out that voters are not happy with “negative campaigns” of politicians. However, the political scientists suggested it is pointless for candidates to stay positive. The damage from staying positive is heaviest when the opponent is attacking. Explain the dilemma.
Airlines practice price discrimination by charging leisure travelers and business travelers different prices. Why do you think by charging different prices; the airline companies will maximize their profits? Discuss briefly.
Briefly explain the differences between the equilibrium concepts we discussed in game theory. What do we need to assume about people’s decision making to find equilibria?
Chapter 14 Solutions
ECONOMICS-W/MYECONLAB
Ch. 14 - Prob. 14.1.1RQCh. 14 - Prob. 14.1.2RQCh. 14 - Prob. 14.1.3RQCh. 14 - Prob. 14.1.4PACh. 14 - Prob. 14.1.5PACh. 14 - Prob. 14.1.6PACh. 14 - Prob. 14.1.7PACh. 14 - Prob. 14.1.8PACh. 14 - Prob. 14.1.9PACh. 14 - Prob. 14.1.10PA
Ch. 14 - Prob. 14.2.1RQCh. 14 - Prob. 14.2.2RQCh. 14 - Prob. 14.2.3RQCh. 14 - Prob. 14.2.4RQCh. 14 - Prob. 14.2.5PACh. 14 - Prob. 14.2.6PACh. 14 - Prob. 14.2.7PACh. 14 - Prob. 14.2.8PACh. 14 - Prob. 14.2.9PACh. 14 - Prob. 14.2.10PACh. 14 - Prob. 14.2.11PACh. 14 - Prob. 14.2.12PACh. 14 - Prob. 14.2.13PACh. 14 - Prob. 14.2.14PACh. 14 - Prob. 14.2.15PACh. 14 - Prob. 14.2.16PACh. 14 - Prob. 14.2.17PACh. 14 - Prob. 14.2.18PACh. 14 - Prob. 14.3.1RQCh. 14 - Prob. 14.3.2RQCh. 14 - Prob. 14.3.3PACh. 14 - Prob. 14.3.4PACh. 14 - Prob. 14.3.5PACh. 14 - Prob. 14.3.6PACh. 14 - Prob. 14.4.1RQCh. 14 - Prob. 14.4.2RQCh. 14 - Prob. 14.4.3PACh. 14 - Prob. 14.4.4PACh. 14 - Prob. 14.4.5PACh. 14 - Prob. 14.4.6PACh. 14 - Prob. 14.4.7PACh. 14 - Prob. 14.4.8PACh. 14 - Prob. 14.2CTECh. 14 - Prob. 14.3CTE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- What is the difference between macroeconomics and microeconomics? And where would game theory fall within these?arrow_forwardA case study in the chapter describes a phoneconversation between the presidents of AmericanAirlines and Braniff Airways. Let’s analyze thegame between the two companies. Suppose thateach company can charge either a high price fortickets or a low price. If one company charges $300,it earns low profit if the other company also charges$300 and high profit if the other company charges$600. On the other hand, if the company charges $600,it earns very low profit if the other company charges$300 and medium profit if the other company alsocharges $600.a. Draw the payoff matrix for this game.b. What is the Nash equilibrium in this game?Explain.c. Is there an outcome that would be better than theNash equilibrium for both airlines? How could itbe achieved? Who would lose if it were achieved?arrow_forwardWhat is game theory? How does it relate to strategic decision making? What do the phrases dominant strategy and Nash Equilibrium mean as they apply to game theory?arrow_forward
- What is the link between game theory and market structures? Which market structure is game theory more linked to?arrow_forwardThe author describes the case of the "Prisoner's Dilemma" to demonstrate which of the following? Competition and the pursuit of unfettered self-interest result in greater efficiency, and benefits everyone involved equally. Effective policy can place incentives in such a manner that the very pursuit of unfettered self-interest of the prisoners results in the desired outcome of getting both to confess to the crime. Just as in the case of the prisoner's dilemma, the pursuit of unfettered self-interest will cause the fishermen who fish Atlantic swordfish (a common resource) to harvest them wisely and limit the number of fish each fisherman catches. Thus the fishermen's ability to pursue unfettered self-interest will allow the population of swordfish to remain stable and even grow. The fishermen trust each other to behave responsibly and in the interest of the common good.arrow_forwardA case study in the chapter describes a phone conversation between the presidents of American Airlines and Braniff Airways. Let's analyze the game between the two companies. Suppose that each company can charge either a high price for tickets or a low price. If one company charges $300, it cams low profit if the other company also charges $300 and high profit if the other company charges $600. On the other hand, if the company charges $600, it cams very low profit if the other company charges $300 and medium profit if the other company also charges $600. a. Draw the decision box for this game. b. What is the Nash equilibrium in this game? Explain. c. Is there an outcome that would be better than the Nash equilibrium for both airlines? How could it be achieved? Who would lose if it were achieved?arrow_forward
- In game theory, what is a subgame? What is a subgame-perfect Nash equilibrium? If possible, could you please provide an example? Thank you!arrow_forwardHi this is from a textbook. Thank you. Consider the following game in which Sally can play T or B and John chooses between L or R. Each player makes their choice simultaneously. If Sally chooses T and John chooses L, Sally gets a payoff of 5 and John has a payoff of 4. If Sally plays T and John R, Sally’s payoff is 8 and John gets 3. If Sally Chooses B and John L, the payoffs are 3 to Sally and 2 to John. Finally, if Sally chooses B and John R, the payoffs are 7 to Sally and 0 to John. Which statement is true? a) The Nash equilibrium is (B,R); this is a prisoners’ dilemma b) The Nash equilibrium is (T,R); this is a prisoners’ dilemma c) The Nash equilibrium is (T,R); this is not dominant strategy equilibrium d) The Nash equilibrium is (T,L); this is a dominant strategy equilibrium e) None of the abovearrow_forwardWhat is game theory? How can firms use game theory?arrow_forward
- Using game theory what are some examples in where Nash equilibrium is incorporated?arrow_forwardSuppose China and the US are deciding whether to join an international agreement to mitigate climate change. The matrix below contains payoffs that represent each country’s net benefit from their decisions. Use this information to answer Question 24. CHINA USA Join Agreement Do Not Join Agreement Join Agreement (100,100) (0,125) Do Not Join Agreement (125,0) (25,25) [24] What does each country decide to do in a Nash equilibrium? AND What is the efficient outcome? Nash: Efficient:arrow_forwardWhat is prisoners dilemma? and how it works? Explain in detailarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education
Decision Tree Analysis - Intro and Example with Expected Monetary Value; Author: Vincent Stevenson;https://www.youtube.com/watch?v=cbCsCQ4l4Zs;License: Standard Youtube License