EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 4, Problem 4.1P
a
To determine
To find:Whether gambles are fair or not.
b)
To determine
To know:Preference of gamble.
c)
To determine
To ascertain:Whether W will take a gamble if roulette game is not forcibly played.
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We learned that we can use choice between a gamble over someone's best and worst outcomes and getting an outcome of interest (like getting pizza) for certain as a way to assign numeric values to utility (on a scale of 0 to 1).
Using this method, if you are indifferent between the following:
A gamble that has a 0.3 chance of your best possible outcome (and no lower chance), and a 0.7 chance of your worst possible outcome.
Getting pizza for certain.
it means that your utility for getting pizza is:
There are two firms, whose production activity consumes some of the clean air that surrounds our planet. The total amount of clean air is K > 0, and any consumption of clean air comes out of this common resource. If firm i ∈ {1, 2} uses ki of clean air for its production, the remaining amount of clean air is K − k1 − k2. Each player derives utility from using ki for production and from the remainder of clean air. The payoff of firm i is given by
ui(ki , kj ) = ln(ki) + ln(K − ki − kj ) j ≠ i ∈ {1, 2}.
(a) Assuming that each firm chooses ki ∈ (0, K), to maximize its payoff function, derive the players’ best response functions and find a Nash equilibrium.
(b) Is the equilibrium you found in (a) unique or not? What are equilibrium payoffs?
Consider the following Bayesian game. There are two players 1 and 2. Both players choose whether to play A or B. Two states are possible, L and R. In the former, players play a stag-hunt game, and in the latter, players play a matching pennies game. Suppose that Player 2 knows the state, while Player 1 thinks that the state is L with probability q and R with probability 1 ! q. Payo§s in each state respectively satisfy:
Player 1 is the row player, and their payo§ is the first to appear in each entry. Player 2 is thecolumn player and their payo§ is the second to appear in each entry.
(a) What is the set of possible strategies for the two players in this game?
(b) Find all the pure strategy Bayes Nash equilibria for any value of q 2 (0, 1).
Chapter 4 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 4.1 - Prob. 1MQCh. 4.1 - Prob. 2MQCh. 4.1 - Prob. 3MQCh. 4.2 - Prob. 1TTACh. 4.2 - Prob. 2TTACh. 4.2 - Prob. 1MQCh. 4.3 - Prob. 1TTACh. 4.3 - Prob. 2TTACh. 4.3 - Prob. 1MQCh. 4.3 - Prob. 2MQ
Ch. 4.3 - Prob. 3MQCh. 4.3 - Prob. 1.1TTACh. 4.3 - Prob. 1.2TTACh. 4.3 - Prob. 2.1TTACh. 4.3 - Prob. 2.2TTACh. 4.3 - Prob. 1.1MQCh. 4.3 - Prob. 2.1MQCh. 4.3 - Prob. 3.1MQCh. 4.4 - Prob. 1TTACh. 4.4 - Prob. 2TTACh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQCh. 4 - Prob. 4.1PCh. 4 - Prob. 4.2PCh. 4 - Prob. 4.3PCh. 4 - Prob. 4.4PCh. 4 - Prob. 4.5PCh. 4 - Prob. 4.6PCh. 4 - Prob. 4.7PCh. 4 - Prob. 4.8PCh. 4 - Prob. 4.9PCh. 4 - Prob. 4.10P
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