The next three questions pertain to the following normal-form game played by Pepsi and Coke: Coke Pepsi → Advertise Don't 3.3 0,5 5.0 4,4 Advertise Don't 7. Write in the blank Coke's best response to Pepsi, if Pepsi Advertises. 8. If the firms could collude, what pair of actions would they try and ngree on (write "Advertise" or "Dont" on the line)? Pepsi: Coke: 9. What are the Nash equilibrium strategies of the firms? Coke: Pepsi:

The next three questions pertain to the following normal-form game played by Pepsi and Coke: Coke Pepsi → Advertise Don't 3.3 0,5 5.0 4,4 Advertise Don't 7. Write in the blank Coke's best response to Pepsi, if Pepsi Advertises. 8. If the firms could collude, what pair of actions would they try and ngree on (write "Advertise" or "Dont" on the line)? Pepsi: Coke: 9. What are the Nash equilibrium strategies of the firms? Coke: Pepsi:

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 3MC

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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.
Discuss intuitively in which situations you think this game is better represented as a simultaneous move game and when it is better represented as a sequential move game
Suppose this is a one-shot game played by City Potato Farm and Country Potato Farm. What is the cooperative outcome of this game? Is it a good prediction of this game? options, pick one: Both City Potato Farm and Country Potato Farm produce 7,000 potatoes; Yes Both City Potato Farm and Country Potato Farm produce 5,000 potatoes; Yes Both City Potato Farm and Country Potato Farm produce 5,000 potatoes; No City Potato Farm produces 7,000 potatoes and Country Potato Farm produces 5,000 potatoes; No Both City Potato Farm and Country Potato Farm produce 7,000 potatoes; No
How do we solve a Sequential-move game?
ALBUS MINERVA N S Z MINERVA لی a C a b 3,3 ALBUS b 0,4 2,2 4 N S 15,2 1,3 13,1 For the above sequential game, both Albus and Minerva make moves in two possible situations. A number in purple indicates which node of the two for each of Albus and Minerva. Albus' strategy NS indicates a strategy of taking action N at node 1 and action 5 at node 4. Minerva's strategy ab indicates a strategy of taking action a at node 2 and action b at node 3. Adopt this format of writing strategies, find the subgame perfect Nash equilibrium. Fill in the blanks: The subgame perfect Nash equilibrium of this game is "Albus" Minvera"
one two X, 14 three four Firm B Low Firm A Sell High 6, Y Buy Low Let X = 9, Y = 15 and Z=10. This game has 10, Z Firm B High 8,8 Nash equilibrium.
K In a game, there are two players: Player 1 and Player 2. They have two strategies to select from, A and B. Where the first payoff and the second payoff in every cell is for Player 1 and Player 2 respectively. Which of the following is an example of a game without a dominant strategy? (Check all that apply.) A. C. Player 1 Player 1 A B A B A 3,-3 1, 1 A 2,1 0,0 Player 2 Player 2 B 3, -3 5, -5 B 0,0 1,2 B. D. Player 1 Player 1 A B A B A 1,-1 -1, 1 Player 2 Player 2 A 3.5, -1.5 2.7, -1 B -1, 1 1,-1 B -5, 3 0,0 If the dominant strategy for Player 1 is selecting strategy A and the dominant strategy for Player 2 is strategy B, then A B is an example of a c From ame C Murat Çok Di id Kushn y My Hand
In the following simultaneous-move game, what is player 1's maximin strategy? Player 2 OL OR OU OD Player 1 L R U 50, 50 0, -10 D -10, 0 0,0
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Suppose that Green Giant and Red Rover are two companies competing in the canned vegetable market. Each is contemplating an aggressive new ad campaign. The payoffs of each decision are listed below, where Green Giant is player 1. Green/Red Ad Campaign No Ad Campaign |Ad Campaign |1 million, 1 million zero, 3 million No Ad Campaign 3 million, zero 2 million, 2 million What is the Nash equilibrium of the game? a. (advertise, don't advertise) b. (advertise, advertise) c. (don't advertise, don't advertise) d. (don't advertise, advertise)
1. Two electricity firms compete in the same market and are deciding their level of advertising in order to increase customers and profits. The following matrix shows the profits (in millions) according to the strategy chosen: Firm 1 Strategies Low Advertising Aggressive Advertising Firm 2 Low Advertising 15, 15 20, -2 Aggressive Advertising -2, 20 5,5 a. Identify the one-shot Nash equilibrium. Comment. b. Suppose the players know this game will be repeated exactly 10 times. Can they achieve payoffs that are better than the one-shot Nash equilibrium? Explain. c. Suppose this game is infinitely repeated and the interest rate is 5%. Can the players achieve the collusive outcome? Explain.
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