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- Solve for the Nash equilibrium (or equilibria) in each of the following games. (a) The following two-by-two game is a little harder to solve since firm 2’spreferred strategy depends of what firm 1 does. But firm 1 has a dominantstrategy so this game has one Nash equilibrium. Firm 2 Launch Don’tFirm 1 Launch 60, -10 100, 0 Don’t 80, 30 120, 0 What is the Nash equilibrium of this simultaneous-move game? (b) What would the outcome of this game be if instead firm 1 moved first and then, after seeing what firm 1 chose, firm 2 chose it strategy? In this case firm 1 doesn’t necessarily need to choose a best response, but firm 2 must choose a best response since it moves second.You are playing a game with a friend. It’s yourmove but you don’t have a dominant strategy.Your payoff depends on what your friend doesafter your move. You consider flipping a coin todecide what to do. You are about to reach for acoin, but then you realize that your friend has adominant strategy. Explain how using backwardinduction (rather than a coin toss) will now determine your next moveHal and Nick are racing to develop a new brand of coconut milk that they both believe will be the next big soft drink. The payoff matrix shows the economic profit in millions of dollars for the game that Hal and Nick play. O A. Hal and Nick will never cooperate in this research. OB. Hal and Nick will cooperate in this research every time they play the game. Q Search OC. It is possible for cooperation in this research and development game if the game is played repeatedly and cheating on the agreement is punished using a tit-for-tat strategy OD. Hal and Nick will cooperate in this research only if a threat exists that a third firm will enter the coconut milk market Pat's strategies (blue squares) Develop Not develop 0 Hal's strategies (red squares) Develop -1.0 2.5 2.5 1.0 Not develop Next -1.0 1.0
- Mark and Bevis play a static game. Mark chooses x and Bevis chooses y. Mark's payoff is 16 - (x- y)2, and Bevis' payoff is 16 - (x-0.5)2 - (y-0.5)2. Then O a. both Mark and Bevis have dominant strategies O b. Mark has a dominant strategy, but Bevis does not O c. Bevis has a dominant strategy, but Mark does not O d. neither Mark or Bevis have dominant strategiesA) Focus on the strategic game at the lower-right side of the gametree. Find all the Nash equilibria for this subgame, including the mixed-strategyones. (b) Find all the subgame perfect equilibria for the entire game, allowingfor both pure and mixed strategies1. Find pure strategy Nash equilibrium and find the outcome, that will be played in cooperation. Explain clearly.
- Suppose O2 and Vodafone are the only two telecommunicationscompanies in UK. Both companies are considering whether ornot to stop offering unlimited data plans. Each company has twostrategies: stop or don’t stop. The first entry in the brackets is the payoffsof O2 and the second entry is the payoffs of Vodafone, both in $million.What will be the dominant strategies of O2 and Vodafone and what willbe the Nash equilibrium? Explain your answers.Save Answer Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies spit the market and earn $60 million each. If they both advertise, they again split the market, but profits are lower by $20 million since each company must bear the cost of advertisirlg. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. In this case, the company that advertises earns $70 million while the company that does not advertise earns only $30 million. What will these two companies do if they behave as individual profit maximizers? Neither company will advertise, and PM Inc. earns $60. One company will advertise, the other will not. Brown Inc. earns $70. Both companies will advertise, and PM Inc. earns $40. Both companies will advertise, and PM Inc. earns $60.O Macmillan Learning McLaren and Red Bull are competing for the Formula One Constructors' Championship and are deciding whether to increase their spending on their aerodynamic (aero) development. The matrix displays the payoffs to the team that result from each possible choice. Note that, due to other factors, the payoffs are not symmetrical. Assume that each team's goal is to earn as many points as possible. a. Does McLaren have a dominant strategy? If so, what is it? O Yes. Their dominant strategy is to leave aero development spending unchanged. O Yes. Their dominant strategy is to increase aero development spending. O No, they do not have a dominant strategy. b. Does Red Bull have a dominant strategy? If so, what is it? O Yes. Their dominant strategy is to increase aero development spending. Yes. Their dominant strategy is to leave aero Red Bull Raise spending Do not change spending McLaren Increase spending Do not change spending McLaren earns 142 points McLaren earns 360 points…
- One of the predictions of the oligopoly model is that: non-price competition is uncommon and price-cutting competition among rivals is common. O prices tend to remain relatively stable despite short-run fluctuations in market demand. the firms' costs of production (raw material, labor, advertising) remain constant over time. only one buyer (monopsony) will result in the long run. MacBook Pro -> G Search or type URL %23 3 4. 7 8 W R YSuppose OPEC has only two producers, Saudi Arabia and Nigeria, Saudi Arabia has far more oil reserves and is the lower-cost producer compared to Nigeria. The payoff matrix in the table to the right shows the profits earned per day by each country. "Low output" corresponds to producing the OPEC assigned quota and "high output" corresponds to producing the maximum capacity beyond the assigned quota Which of the following statements is true? OA. The Nash equilibrium is a cooperative equilibrium. OB. The Nash equilibrium is a noncooperative, dominant strategy equilibrium OC. The Nash equilibrium is a collusive equilibrium. D. There is no Nash equilibrium in this game because each party. pursues its dominant strategy. Low output Nigeria High output Low output Nigeria earns $20 million Saudi Arabia Nigeria earns $30 million Saudi Arabia earns $100 million Saudi Arabia earns $80 million High output Nigeria earns $12 million Saudi Arabia earns $75 million Nigeria earns $20 million Saudi Arabia…2. Consider the following game table: Rowena Top Middle Bottom North 4, 3,5 3 Colin South 2 2, 3,4 East 3, 1 2,3 4,2 a. Complete the payoffs of the game table above so that Colin has a dominant strategy. State which strategy is dominant and explain why. (Note: There are many equally correct answers.) Complete the payoffs of the game table above so that neither player has a dominant strategy, but also so that each player does have a dominated strategy. State which strategies are dominated and explain why. (Again, there are many equally correct answers.) b.