Experiment 1:ultimatum overview paired into groups of two; one is the Proposer, the other the Responder Proposer proposes how to divide $100. Responder chooses either Accept or Reject if Accept, then earnings determined by accepted proposal if Reject, then both players earn $0 Experiment 2: split the pie overview paired into groups of two; one is randomly selected to be Divider divider chooses how to divide $100 payoffs are determined by this choice

Experiment 1:ultimatum overview paired into groups of two; one is the Proposer, the other the Responder Proposer proposes how to divide $100. Responder chooses either Accept or Reject if Accept, then earnings determined by accepted proposal if Reject, then both players earn $0 Experiment 2: split the pie overview paired into groups of two; one is randomly selected to be Divider divider chooses how to divide $100 payoffs are determined by this choice

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Exercise 6.8. Consider the following extensive-form game with cardinal payoffs: 1 R O player pay 000 2 1 M 3 b 010 O player 3's payoff 1 2 221 2 000 0 0 (a) Find all the pure-strategy Nash equilibria. Which ones are also subgame perfect? (b) [This is a more challenging question] Prove that there is no mixed-strategy Nash equilibrium where Player 1 plays Mwith probability strictly between 0 and 1.
Consider the game below with a worker (W) and a firm (F). The worker initially can choose to acquire skills or not acquire skills. If the worker does acquire skills, the firm then gets to decide whether to compensate the worker or not. The extensive form of the game and the payoffs are below. Which of the following is true? W Acquirre Not Acquire There is no Nash equilibrium. C Compensate Not Compensate This game has a single Nash equilibrium. There are two Nash equilibria. None of the above. (0,0) Both players have a strictly dominant strategy. (10,10) (-5,20)
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Two politicians from the same party decide whether to support or oppose the gov- ernment's environmental policy. Politician A prefers that they both support, but Politician B prefers that they both oppose. Both politicians agree that the party should have a coherent position and the worst outcome is that one supports and the other opposes the policy. (a) Formulate this situation as a strategic game - specify the players, actions, and payoffs (you can set-up a table of the actions and payoffs). (b) What are the Nash equilibria of this game? Explain your answer.
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