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The third game (shown below) is the same as the second, except that cheaters are penalized for their behavior in the previous period. Those who expanded output during the first period loose everything they gained in that period. Nash Equilibrium (NE) A: Period 1 B: A X

The third game (shown below) is the same as the second, except that cheaters are penalized for their behavior in the previous period. Those who expanded output during the first period loose everything they gained in that period. Nash Equilibrium (NE) A: Period 1 B: A X

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section: Chapter Questions
Problem 5CQQ
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The third game (shown below) is the same as the second, except that cheaters are penalized for their behavior in the previous period. Those who expanded output during the first period loose everything they gained in that period. Nash Equilibrium (NE) A: Period 1 B: Period 2 Nash Equilibrium (NE) A: B: X X X X 4 A: 4 B: 1 X X A: 6 A: 4 A: 7 A: 5 A: 4 A: 2 A:5 A: 4 B: 6 B: 7 B: 4 B: 5 B: 3 B: 4 B:1 B: 3 a. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. How has the penalty changed the firm's behavior? A t A: 2 B: 2 Nash Equilibrium (NE) A: B: X
Transcribed Image Text:The third game (shown below) is the same as the second, except that cheaters are penalized for their behavior in the previous period. Those who expanded output during the first period loose everything they gained in that period. Nash Equilibrium (NE) A: Period 1 B: Period 2 Nash Equilibrium (NE) A: B: X X X X 4 A: 4 B: 1 X X A: 6 A: 4 A: 7 A: 5 A: 4 A: 2 A:5 A: 4 B: 6 B: 7 B: 4 B: 5 B: 3 B: 4 B:1 B: 3 a. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. How has the penalty changed the firm's behavior? A t A: 2 B: 2 Nash Equilibrium (NE) A: B: X
The second game (shown below) is a repeated game. It represents their behavior in two successive periods. Within each period they act simultaneously, but recall what has happened previously. In the second period, In the second period, the players acquire the same payoffs they did in the first, while retaining the payoffs received in the first. The figure below shows only two of the four possible subgames for the second period. Nash Equilibrium (NE) A: Period 1 B: A Period 2 Nash Equilibrium (NE) A: B: X X X X A: 4 B: 1 X ↑ X A: 6 A: 4 A: 7 A: 5 A: 4 A: 2 A:5 A: 3 B: 6 B: 7 B: 4 B: 5 B: 7 B: 8 B:5 B: 6 a. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. Has the player's behavior changed significantly? Why or why not? A: 2 B: 2 Nash Equilibrium (NE) A: B:
Transcribed Image Text:The second game (shown below) is a repeated game. It represents their behavior in two successive periods. Within each period they act simultaneously, but recall what has happened previously. In the second period, In the second period, the players acquire the same payoffs they did in the first, while retaining the payoffs received in the first. The figure below shows only two of the four possible subgames for the second period. Nash Equilibrium (NE) A: Period 1 B: A Period 2 Nash Equilibrium (NE) A: B: X X X X A: 4 B: 1 X ↑ X A: 6 A: 4 A: 7 A: 5 A: 4 A: 2 A:5 A: 3 B: 6 B: 7 B: 4 B: 5 B: 7 B: 8 B:5 B: 6 a. Solve the game by the Rollback method. Identify the dominant strategies and circle the Nash Equilibrium for each subgame and write it above its starting node. Has the player's behavior changed significantly? Why or why not? A: 2 B: 2 Nash Equilibrium (NE) A: B:
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