8. Collusive outcome versus Nash equilibriumSuppose there is a remote stretch of highway along which two restaurants, Last Chance Café and Desolate Diner, operate in a duopoly. Neitherrestaurant invests in keeping up with health code regulations, but regardless they both have customers as they are the only dining options along a 79-mile portion of the road. Both restaurants know that if they clean up and comply with health codes they will attract more customers, but this alsomeans that they will have to pay workers to do the cleaning.If neither restaurant cleans, each will earn $11,000; alternatively, if they both hire workers to clean, each will earn only $8,000. However, if one cleansand the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $15,000, and the other restaurant willmake only $3,000.Complete the following payoff matrix using the information just given. (Note: Last Chance Café and Desolate Diner are both profit-maximizing firms.)Last Chance CateCleans UpDoesnt Clean UpCleans UpDesolate Diner11Doesn't Clean UpLast Chance Cafe and Despiate Diner decide to collude, the outcome of this game is as follows: Last Chance Cafeand Desolateboth restaurants deode to cheat and behave noncooperatively, the outcome reflecting the unique Nash equilibrium of this game is as follows: LastChance Cale57°F Mostly clow Complete the following payoff matrix using the information just given. (Note: Last Chance Cafe and Desolate Diner are both profit-maximizing firms.)archLast Chance CateCleans UpDoesn't Clean UpCleans UpEDesolate Diner1 Last Chance Café and Desolate Diner decide to collude, the outcome of the game is as follows: Last Chance CaféDinerASDoesn't Clean UpcleansIf both restaurants decide to cheat and behave noncooperatively, the outcome reflecting the unique Nash equilibour does not clean as follows: LastChance Caleand Desolate Diner6and DesolateGrade It NowSave & ContinueContinue without saving57°F Mostly clou

The answer provided below has been developed in a clear step by step manner.Step: 1Alright buddy let…

8. Collusive outcome versus Nash equilibrium Suppose there is a remote stretch of highway along which two restaurants, Last Chance Café and Desolate Diner, operate in a duopoly. Neither restaurant invests in keeping up with health code regulations, but regardless they both have customers as they are the only dining options along a 79- mile portion of the road. Both restaurants know that if they clean up and comply with health codes they will attract more customers, but this also means ans that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $11,000; alternatively, if they both hire workers to clean, each will earn only $5,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $15,000, and the other restaurant will make only $3,000. Complete the following payoff matrix using the information just given. (Note: Last Chance Café and Desolate Diner are both profit-maximizing firms.) Desolate Diner Cleans Up Doesnt Clean Up Cleans Up Doesnt Clean Up

8. Collusive outcome versus Nash equilibrium Suppose there is a remote stretch of highway along which two restaurants, Last Chance Café and Desolate Diner, operate in a duopoly. Neither restaurant invests in keeping up with health code regulations, but regardless they both have customers as they are the only dining options along a 79- mile portion of the road. Both restaurants know that if they clean up and comply with health codes they will attract more customers, but this also means ans that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $11,000; alternatively, if they both hire workers to clean, each will earn only $5,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $15,000, and the other restaurant will make only $3,000. Complete the following payoff matrix using the information just given. (Note: Last Chance Café and Desolate Diner are both profit-maximizing firms.) Desolate Diner Cleans Up Doesnt Clean Up Cleans Up Doesnt Clean Up

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 5MC

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8. Collusive outcome versus Nash equilibrium Suppose there is a remote stretch of highway along which two restaurants, Last Chance Café and Desolate Diner, operate in a duopoly. Neither restaurant invests in keeping up with health code regulations, but regardless they both have customers as they are the only dining options along a 79- mile portion of the road. Both restaurants know that if they clean up and comply with health codes they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $11,000; alternatively, if they both hire workers to clean, each will earn only $8,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $15,000, and the other restaurant will make only $3,000. Complete the following payoff matrix using the information just given. (Note: Last Chance Café and Desolate Diner are both…
8. Collusive outcome versus Nash equilibrium Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly. Both restaurants disregard health and safety regulations, but they continue to have customers because they are the only restaurants within 80 miles of town. Both restaurants know that if they clean up, they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $11,000; alternatively, if they both hire workers to clean, each will earn only $8,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $16,000, and the other restaurant will make only $4,000. Complete the following payoff matrix using the information just given. (Note: All-You-Can-Eat Café and GoodGrub Diner are both profit-maximizing firms.) GoodGrub Diner Cleans Up Doesn't Clean Up Cleans Up 24 24…
8. Collusive outcome versus Nash equilibrium Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly. Both restaurants disregard health and safety regulations, but they continue to have customers because they are the only restaurants within 80 miles of town. Both restaurants know that if they clean up, they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $12,000; alternatively, if they both hire workers to clean, each will earn only $9,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $16,000, and the other restaurant will make only $4,000.
8. Collusive outcome versus Nash equilibrium Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly. Both restaurants disregard health and safety regulations, but they continue to have customers because they are the only restaurants within 80 miles of town. Both restaurants know that if they clean up, they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $13,000; alternatively, if they both hire workers to clean, each will earn only $10,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $18,000, and the other restaurant will make only $6,000. Complete the following payoff matrix using the information just given. (Note: All-You-Can-Eat Café and GoodGrub Diner are both profit-maximizing firms.) All-You-Can-Eat Café Cleans Up Doesn't Clean Up $ GoodGrub…
8. Collusive outcome versus Nash equilibrium Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly. Both restaurants disregard health and safety regulations, but they continue to have customers because they are the only restaurants within 80 miles of town. Both restaurants know that if they clean up, they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $14,000; alternatively, if they both hire workers to clean, each will earn only $11,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $18,000, and the other restaurant will make only $6,000. Complete the following payoff matrix using the information just given. (Note: All-You-Can-Eat Café and GoodGrub Diner are both profit-maximizing firms.) E GoodGrub Diner Cleans Up Doesn't Clean Up Cleans Up 2$…
12. To advertise or not to advertise Suppose that two firms, Hatte Latte and Bean Bruuer, are the only sellers of espresso in some hypothetical market. The following payoff matrix gives the profit (in millions of dollars) earned by each company depending on whether or not it chooses to advertise: Bean Bruuer Advertise Doesn't Advertise Advertise Hatte Latte Doesn't Advertise 9,9 3,15 15,3 11, 11 For example, the lower left cell of the matrix shows that if Bean Bruuer advertises and Hatte Latte does not advertise, Bean Bruuer will make a profit of $15 million, and Hatte Latte will make a profit of $3 million. Assume this is a simultaneous game and that Hatte Latte and Bean Bruuer are both profit-maximizing firms. If Hatte Latte chooses to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer advertises and a profit of $ million if Bean Bruuer If Hatte Latte chooses not to advertise, it will earn a profit of $ does not advertise. million if Bean Bruuer…
1. Describe the characteristics of an oligopolistic market and explain whether it is socially efficient or inefficient. 2. What are the pros and cons of cost-benefit analysis in evaluating policy options? 3. What is a Herfindahl-Hirschman Index and the Lerner Index? How are the 2 indices related?
7. Solving for dominant strategies and the Nash equilibrium Suppose Carlos and Deborah are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Carlos chooses Right and Deborah chooses Right, Carlos will receive a payoff of 5 and Deborah will receive a payoff of 1. Carlos Deborah Left Left 4,4 Right 2,4 Right 6,7 5,1 The only dominant strategy in this game is for to choose The outcome reflecting the unique Nash equilibrium in this game is as follows: Carlos chooses and Deborah chooses
3) Amazon and Target both sell the new Xbox, and have a choice whether to charge a high price or a low price. The payoff matrix identifies the profit either store can expect to make (in millions of dollars). Walmart High Price Low Price High Price b. Identify the Nash Equilibrium. 3,6 5,5 Amazon Low Price 2.8 4.3 a. Identify the Dominant Strategy for either player, or write "none" if there isn't one.
8. Solving for dominant strategies and the Nash equilibrium Suppose Tim and Alyssa are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Tim chooses Right and Alyssa chooses Right, Tim will receive a payoff of 3 and Alyssa will receive a payoff of 6. Tim Left Left 5, 6 Right 4, 2 Alyssa Right 5,5 3,6 The only dominant strategy in this game is for to choose The outcome reflecting the unique Nash equilibrium in this game is as follows: Tim chooses and Alyssa chooses
Beta's Price Policy High Low A B $20 $30 High Alpha's $20 $10 Price Policy C $10 D $ $15 Low $30 $15 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. With independent pricing, the outcome of this duopoly game will gravitate to cell
7. Solving for dominant strategies and the Nash equilibrium Suppose Ethan and Cadence are playing a game that requires both to simultaneously choose an action: Up or Down. The payoff matrix that follows shows the earnings of each person as a function of both of their choices. For example, the upper-right cell shows that if Ethan chooses Up and Cadence chooses Down, Ethan will receive a payoff of 6 and Cadence will receive a payoff of 4. Ethan Up Down Cadence Up 4,3 6, 7 Down 6, 4 7,6 In this game, the only dominant strategy is for to choose The outcome reflecting the unique Nash equilibrium in this game is as follows: Ethan chooses and Cadence chooses