2 Bill and Mary sell ice-cream on the boardwalk in AtlanticCity. They are competitors. There are two spots availableto set up shop on the boardwalk: spot A and spot B. SpotA gets more foot traffic than B. The amount of foot trafficat a spot determines the payoffs of the ice-cream sellers. Ifone seller chooses A and the other chooses B, then theseller on A gets a payoff of $1500, while the seller on Bgets a payoff of $800. If both sellers choose A, then theyeach get $700. If they both choose B, then they each get$600.Suppose Mary gets to choose her location first and thatBill observes this choice before making his own choice.Which of the following is not consistent with a NashEquilibrium of this game?1) Mary chooses A, and Bill chooses B.2) Mary chooses B, and Bill chooses A.3) None of the above.

Let us build the payoff-matrix for the given problem: Bill A B Mary A 700,700…

Bill and Mary sell ice-cream on the boardwalk in Atlantic City. They are competitors. There are two spots available to set up shop on the boardwalk: spot A and spot B. Spot A gets more foot traffic than B. The amount of foot traffic at a spot determines the payoffs of the ice-cream sellers. If one seller chooses A and the other chooses B, then the seller on A gets a payoff of $150o, while the seller on B gets a payoff of $800. If both sellers choose A, then they each get $700. If they both choose B, then they each get $600. Suppose Mary gets to choose her location first and that Bill observes this choice before making his own choice. Which of the following is not consistent with a Nash Equilibrium of this game? 1) Mary chooses A, and Bill chooses B. 2) Mary chooses B, and Bill chooses A. 3) None of the above.

Bill and Mary sell ice-cream on the boardwalk in Atlantic City. They are competitors. There are two spots available to set up shop on the boardwalk: spot A and spot B. Spot A gets more foot traffic than B. The amount of foot traffic at a spot determines the payoffs of the ice-cream sellers. If one seller chooses A and the other chooses B, then the seller on A gets a payoff of $150o, while the seller on B gets a payoff of $800. If both sellers choose A, then they each get $700. If they both choose B, then they each get $600. Suppose Mary gets to choose her location first and that Bill observes this choice before making his own choice. Which of the following is not consistent with a Nash Equilibrium of this game? 1) Mary chooses A, and Bill chooses B. 2) Mary chooses B, and Bill chooses A. 3) None of the above.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.8P

See similar textbooks

Similar questions

Otto has a monopoly on limousine service, and Carla is thinking about Kentenng the market. The outcome of the entry-deterrence game represented by the game tree to the right is that Otto picks the quantity and Carla the market Small Quantity Otto Large Quantity Carla Carla Enter Stay out Enter Otto $50 Carla $50 Otto $90 Carla 50 Otto So Carla -$10 Otto $60 Stay out Carla $0 a C
Refer to the table below to answer the following questions. Table 14.2.10 Fim A Comply A: Sim Cheat A $1 Sm Comply B Sim B-S05m Firm B A:-50.5m A0 Cheat B $15m B:0 Refer to Table 14.2.10. Firm A and Firm B are the only producers of soap powder. They collude and agree to share the market equally. The equilibrium a dominant strategy equilibrium because the strategy in this game is for a firm Select one O A is to comply regardless of the other firm's choice O B.is to comply when the other firm cheats and to cheat when the other firm complies O Cis not to comply when the other firm complies and to cheat when the other firm cheats OD. is to cheat regardless of the other firm's choice OEis not to comply when the other firm cheats and to cheat when the other firm complies 219 PM
Chemical Firm 1 Ton Pollution Pollution Shut 2 Tons 15 20 Down 01 15 20 Operate 25 10 2. The above figure shows the payoff matrix for two firms. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. a) Determine the Nash equilibrium without property rights. b) If the chemical firm owns the lake and the beach owner must pay the chemical firm $10 to produce only one ton of pollution, what is the outcome? c) If the beach owner owns the lake and the chemical firm must pay $10 per ton of pollution, what is the outcome? d) Compare results of part a, b, and c. Beach
mall Dynaco Jains Pynaco gains 4. Synergy and Dynaco are the only two firms in a specific high - tech industry. They face the following payoff matrix as they determine the size of their research budget: Synergy's Deeision Small Bodget Lange Budget Synergy gain $420M Symedgy Dynaco ins Large budget Dynaro gains $30M Synergy Small Dynaco Jains Budget Jains zero Dynae's 2ero gains $70m Synergy Pynaco gains gains #50M Decision a. Does Synergy have a dominant strategy? Explain. b. Does Dynaco have a dominant strategy? Explain. c. Is there a Nash equilibrium for this scenario? Explain. (Hint: Look closely at the definition of Nash equilibrium.)
COUNTRY B HIGH TARIFF LOW TARIFF HIGH TARIFF $1M $1 M $2M, $1.5 M COUNTRY A LOW $1.5 M, $ 2M $3м, $3 м TARIFF 1. What is the dominant strategy for: a. Country A b. Country B Is there an equilibrium dominant strategy for this game? 2. Find the Nash equilibrium a. Outcome = (High, high) b. Outcome = (High. Low) c. Outcome = (Low, high) d. Outcome = (Low, low) 3. What is the Maximin strategy for Country A and Country B? C.
Assume that the competition between Boeing and Airbus can be characterized by the following mnatrix Aórbus Produce Qut] Produce -15/ – 5 90/0 Boeing Quit 0/140 0/0 where the first number in each cell denotes the payoff that Boeing receives and the second nunber is the payoff that Airbus receives. Assume that Boeing has a first mover advantage. Then a subsidy of 10 provided to Airbus by the European government will change nothing will increase European welfare will negatively affect European welfare result in both firms leaving the market
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.
Describe the payoffs for an R&D game of chicken and contrast them with the payoffs in a prisoners' dilemma game. The outcome is that In the prisoners' dilemma R&D game, a firm can use the R&D O A. if either it or its competitor conducts the R&D; one firm conducts R&D; B. only if it conducts the R&D; one firm conducts R&D; OC. If either it or its competitor conducts the R&D; neither firm undertakes R&D; D. only if it conducts the R&D; both firms undertake R&D; In an R&D game of chicken, a firm can use the R&D The outcome is that A. only if it conducts the R&D; one firm conducts R&D B. only if it conducts the R&D; both firms undertake R&D C. if either it or its competitor conducts the R&D; one firm conducts R&D D. If either it or its competitor conducts the R&D; both firms undertake R&D
fnan421 Word Gozden Geçir Górunum Vard m e vaomak sted nz sOv eyin 1) Two firms, X and Y, are planning to market their new products. Each firm can develop either TV or Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix: FIRM Y TV LAPTOP FIRM X TV 30, 30 20, 35 LAPTOP 40,70 20, 20 A) What is the cooperative outcome? B) Which firm benefits most from the cooperative outcome? How much would that firm need to offer the other?
Dave and Ellen enter into a contract via e-mail. When a dispute arises over the performance of the deal, Dave files a suit against Ellen. The type of law that governs transactions conducted via the Internet is referred to by the term: Select one: O a. cyberlaw. b. civil law. C. equitable maxims. O d. IRAC.
fnan421 WWord Gozden Geç r Gorunum Varc m Ne yaomak steci gnz soy evn 1) Two firms, X and Y, are planning to market their new products. Each firm can develop either TV or Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix: FIRM Y TV LAPTOP FIRM X TV 30, 30 50, 35 LAPTOP 40,70 20, 20 A) If both firms make their decisions at the same time and follow maximin (low-risk) strategies, what will the outcome be? B) Suppose both firms try to maximize profits, but Firm X has a head start in planning, and can commit first. Now what will the outcome be? What will the outcome be if Firm Y has a head start in planning and can commit first? I
Consider the following public good provision game. There are 3 players with private infor- mation about their costs of contributing for the public good. Players have two actions: contribute or don't contribute. If at least two players contribute for the public good, then they all get a payoff of 1. If less than two players contribute, then all receive zero payoff. Only the players who contribute for the public good pays the cost. The costs are either a or 0.8 and each is equally likely. (a) Find the highest value of r in a Bayesian Nash equilibrium where all players with type r contributes and all players with type 0.8 don't. (b) Now suppose that costs are either 0.2, 0.5 or 0.8 and all three are equally likely. Find a Bayesian Nash equilibrium in which players with type 0.2 always provide, players with type 0.8 never provide and players with type 0.5 uses a mixed strategy in which they provide with probability p > 0. Find the value of p.