MICROECONOMICS CONNECT ACCESS CODE ONL
21st Edition
ISBN: 9781260720853
Author: McConnell
Publisher: MCG
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Chapter 8, Problem 8DQ
To determine
The status – quo bias in insurance policies:
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Assume the following game situation:
If Player A plays UP and Player B plays LEFT then Player A gets $2 and Player B gets $4.
If Player A plays UP and Player B plays RIGHT then Player A gets $3 and Player B gets $6.
If Player A plays DOWN and Player B plays LEFT then Player A gets $5 and Player B gets $2.
If Player A plays DOWN and Player B plays RIGHT then Player A gets $1 and Player B gets $1.
What is the mixed strategy expected payout for Player B?
1
40/15
39/15
11/2
We have a group of three friends: Kramer, Jerry and Elaine. Kramer has a $10 banknote that he will auction off, and Jerry and Elaine will be bidding for it. Jerry and Elaine have to submit their bids to Kramer privately, both at the same time. We assume that both Jerry and Elaine only have $2 that day, and the available strategies to each one of them are to bid either$0, $1 or $2. Whoever places the highest bid, wins the $10 banknote. In case of a tie (that is, if Jerry and Elaine submit the same bid), each one of them gets $5. Regardless of who wins the auction, each bidder has to pay to Kramer whatever he or she bid.
Does this game have a Nash Equilibrium? (If not, why not? If yes, what is the Nash Equilibrium?)
We have a group of three friends: Kramer, Jerry and Elaine. Kramer has a $10 banknote that he will auction off, and Jerry and Elaine will be bidding for it. Jerry and Elaine have to submit their bids to Kramer privately, both at the same time. We assume that both Jerry and Elaine only have $2 that day, and the available strategies to each one of them are to bid either$0, $1 or $2. Whoever places the highest bid, wins the $10 banknote. In case of a tie (that is, if Jerry and Elaine submit the same bid), each one of them gets $5. Regardless of who wins the auction, each bidder has to pay to Kramer whatever he or she bid.
Does Jerry have any strictly dominant strategy? Does Elaine?
Chapter 8 Solutions
MICROECONOMICS CONNECT ACCESS CODE ONL
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