Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 15.3, Problem 1RQ
To determine
The punishment strategies if a prisoners’ dilemma game is played repeatedly.
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What is the Nash Equilibrium in a game?A. A situation where all players cooperate for maximum gainB. A situation where no player can improve their outcome by changing their strategy unilaterallyC. A situation where players always choose the same strategyD. A situation where players randomly select strategies
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.
(a) Compute the Nash Equilibrium in pure strategies of the game above. (b) Compute the subgame perfect Nash equilibrium.(c) Compute the perfect Bayesian euilibrium. (I need help with how to solve these questions in detail)
Chapter 15 Solutions
Macroeconomics
Ch. 15.1 - Prob. 1RQCh. 15.1 - Prob. 2RQCh. 15.1 - Prob. 3RQCh. 15.1 - Prob. 4RQCh. 15.2 - Prob. 1RQCh. 15.2 - Prob. 2RQCh. 15.2 - Prob. 3RQCh. 15.2 - Prob. 4RQCh. 15.2 - Prob. 5RQCh. 15.2 - Prob. 6RQ
Ch. 15.3 - Prob. 1RQCh. 15.3 - Prob. 2RQCh. 15.4 - Prob. 1RQCh. 15.4 - Prob. 2RQCh. 15.4 - Prob. 3RQCh. 15.4 - Prob. 4RQCh. 15.4 - Prob. 5RQCh. 15 - Prob. 1SPACh. 15 - Prob. 2SPACh. 15 - Prob. 3SPACh. 15 - Prob. 4SPACh. 15 - Prob. 5SPACh. 15 - Prob. 6SPACh. 15 - Prob. 7SPACh. 15 - Prob. 8SPACh. 15 - Prob. 9APACh. 15 - Prob. 10APACh. 15 - Prob. 11APACh. 15 - Prob. 12APACh. 15 - Prob. 13APACh. 15 - Prob. 14APACh. 15 - Prob. 15APACh. 15 - Prob. 16APACh. 15 - Prob. 17APACh. 15 - Prob. 18APACh. 15 - Prob. 19APACh. 15 - Prob. 20APACh. 15 - Prob. 21APACh. 15 - Prob. 22APACh. 15 - Prob. 23APA
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- Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Film A) is large and the other film (Film B) is small, as the prisoners dilemma box in Table 10.4 shows. Assuming that both films know the payoffs, what is the likely outcome in this case?arrow_forwardQuestion 2 This is game theory. (c,c), (c,d), (d,c) are efficient, why? Definition:An outcome is Pareto efficient if there is no other outcome that increases at least one player's payoff without decreasing anyone else's Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this linearrow_forwarda. The president of a Japanese electronics company, Takashi Hashiyama, famously chose the auction housefor his company’s art collection by having representatives from two auction houses, Christie’s and Sotheby’s,play a round of rock-paper-scissors. At stake were millions of dollars in commissions. Show the payoff matrixfor a game where the payoff is 1 if you win, 0 if you tie, and -1 if you lose. I’m sure you know this already, butjust in case: rock breaks scissors, scissors cut paper, and paper smothers rock. Here’s an article about the actualgame if you’re interested. b. If you were in a high stakes game…arrow_forward
- Could you put this game tree into game matrix form and find the nash equilibrium please. I will up votearrow_forward. In a gambling game, Player A and Player B both have a $1 and a $5 bill. Each player selects one of the bills without the other player knowing the bill selected. Simultaneously they both reveal the bills selected. If the bills do not match, Player A wins Player B's bill. If the bills match, Player B wins Player A's bill. a. Develop the game theory table for this game. The values should be expressed as the gains (or losses) for Player A. b. Is there a pure strategy? Why or why not? c. Determine the optimal strategies and the value of this game. Does the game favor one player over the other? d. Suppose Player B decides to deviate from the optimal strategy and begins playing each bill 50% of the time. What should Player A do to improve Player A’s winnings? Comment on why it is important to follow an optimal game theory strategy.arrow_forwardConsider a game between 2 payers (Ann and Bill) where each chooses between 3 actions (Up, Middle and Down). 1) Create a payoff matrix that reflects this. 2) Fill in payoff numbers that makes this game a Prisoner's Dilemma. 3) Explain why your game is a Prisoner's Dilemma.arrow_forward
- Consider the following price game: Firm 1 Firm 2 High Low High 20, 20 12, 24 Low 24, 12 14, 14 Remark: In simultaneous move games (games with rows and columns) theconvention is to write the row player’s payoff first and the column player’spayoff second. (a) What is the Nash equilibrium of this game? Recall that for each playeryou should find the best response to each of the opponents’ strategies andunderline the associated payoff. Then look for a cell where both strategiesare best responses to each other. This is a Nash equilibrium. (b) Does either firm have a dominate strategy (a strategy that is always abest response)?arrow_forward1. Ten commuters must decide simultaneously in the morning to use route A or route B to go from home (same place for all) to work (ditto). If a of them use route A, each of them will travel for 10a + 40 minutes; if b of them use route B, each of them will travel for 10b minutes. Everyone wishes to minimize his/her commuting time. a) Describe the pure Nash equilibrium (or Nash equilibria) of this ten-person game. Compute the corresponding profile of commuting times. Explicitly list all equilibrium conditions that are satisfied.arrow_forwardConsider the strategic form game shown. a. Assume that both players are rational. What happens?b. Assume that both players are rational and that each believes that theother is rational. What happens?c. Find the strategies that survive the ISDS.arrow_forward
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