onsider a market with twO Tirms, Target and Wal-Mart, that sell CDS In their music department. Both ust choose whether to charge a high price ($25) or a low price ($15) for the new Miley Cyrus CD. hese price strategies with corresponding profits are depicted in the payoff matrix to the right. Target' re in red and Wal-Mart's are in blue. arget's dominant strategy is to pick a price of $ 15.

onsider a market with twO Tirms, Target and Wal-Mart, that sell CDS In their music department. Both ust choose whether to charge a high price ($25) or a low price ($15) for the new Miley Cyrus CD. hese price strategies with corresponding profits are depicted in the payoff matrix to the right. Target' re in red and Wal-Mart's are in blue. arget's dominant strategy is to pick a price of $ 15.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.7P

See similar textbooks

Similar questions

Intel and AMD are the two dominant producers of microchip processors. The following matrix gives the payoffs (in millions of dollars) of the two firms for different combinations of their pricing strategies. The first number is Intel's payoff and the second AMD's. AMD Intel Low Price High Price Low Price 35, 30 30, 60 High Price 70,25 65,55 O If this game is played sequentially, the Nash equilibrium will not change irrespective of who moves first. If this one-shot game is repeated for 10 times, the Nash equilibrium is for both firms to choose High Price. O In this game, Pareto criterion leads both firms to choose High Price. This game is an example of coordination game.
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
Solving for dominant strategies and the Nash equilibrium Suppose Felix and Janet 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 Felix chooses Right and Janet chooses Right, Felix will receive a payoff of 3 and Janet will receive a payoff of 7. Attached the table The only dominant strategy in this game is for (Janet / Felix) to choose (Left / Right). The outcome reflecting the unique Nash equilibrium in this game is as follows: Felix chooses (Left / Right) and Janet chooses (Left / Right).
The following payoff matrix depicts the profits for the only two firms in this oligopolistic industry. In each cell, the 1st number is Firm A’s profit and the 2ndnumber is Firm B’s Profit. (Scenario: Payoff Matrix for Firms A and B) In the scenario Payoff Matrix for Firms A and B. If they play the game for 10 times, what will be firm A's pay off if both A and B will choose "always choosing High price strategy", i.e the firm will always choose High price each time? 60 Need more information to tell. 100 6
Consider a market with two firms, Kellogg and Post, that sell breakfast cereais. Both companies must choose whether to charge a high price ($5.00) or a low price ($3.00) for their cereals. These price strategies, with corresponding profits, are depicted in the payoff matrix to the right. Kellogg's profits are in red and Post's are in blue. What is the cooperative equilibrium for this game? Kelogg Price- $5.00 Price $3.00 OA The cooperative equilibrium is for Kelogg to choose a price of $3.00 and Post to choose a price of $5.00. OB. The cooperative equilibrium is for Kellogg and Post to both choose a price of $3.00. OC. The cooperative equilibrium is for Kellogg and Post to both choose a price of $5.00. OD. The cooperative equilibrium is for Kellogg to choose a price of $5.00 and Post to choose a price dk $3.00. OF Acooperative equilibrium does not exist for this game 00 Price= $5.00 1200 S000 $1.000 Post Is the cooperative equilibrium ikely to occur? $1.000 Price $3.00 450 The…
Dairy King Advertise Doesn't Advertise Advertise 7,7 12, 3 Creamland Doesn't Advertise 3, 12 10, 10 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $12 million, and Dairy King will make a profit of $3 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of not advertise. million if Dairy King advertises and a profit of million if Dairy King does If Creamland decides not to advertise, it will earn a profit of does not advertise. million if Dairy King advertises and a profit of million if Dairy King If Dairy King advertises, Creamland makes a higher profit if it chooses If Dairy King doesn't advertise, Creamland makes a higher profit if it chooses Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? ◇ Creamland will…
Supersubs and Hotwich are the only two sandwich shops in town. They have differentiated their products so that Supersubs sells cold sub sandwiches and Hotwich sells hot sandwiches. At any given time, however, Supersubs could expand its selection by purchasing a toaster and Hotwich could also easily start offering cold sandwiches. Refer to the game for the expected payoffs of their possible choices. Supersubs Sell cold only Expand selection Hotwich Sell hot only A $12$12 $10$10 B $18$18 $2$2 Expand selection C $2$2 $19$19 D $5$5 $6$6 What is the unique equilibrium outcome for a one-time game?
Consider a situation where two firms, 1 and 2, compete by choosing prices simultaneously. Theycan either compete (charge a low price) or cooperate (collude, charging a high price). The firmsplay this competition game repeatedly and indefinitely, using a grim trigger strategy toincentivize cooperation. They use the same interest rate, i, to discount future payoffs. Payoffsare $4,050 when both firms cooperate and $3,600 when they compete. If one firm charge a lowprice while the other charges a high price, the firm charging the low price gets $7,200, and theother gets zero, but now assume there is a 10% chance that aregulatory agency will give both firms a $1,500 fine in each period if they are caught colluding.Find the condition on the interest rate, i , necessary for sustaining the cooperative equilibrium.Which of the following statements is correct?(a) For any i < 1/7 the firms will cooperate.(b) For any i < 1/11 the firms will cooperate.(c) For any i > 1/11 the firms will…
Firm A Strategy Advertise Don't Advertise Firm B Advertise 0,0 -1,40 Don't Advertise 40, -1 10, 10 Two cigarette manufacturers play the following simultaneous-move billboard advertising game. Profit payoffs for both companies are shown in the normal form game below. There is a 20 percent chance that the government will ban cigarette sales in any given year. If they collude and Firm A cheats, how much will Firm A earn in period 1? (Enter a numerical value as your answer with no decimal points. For example, if your answer is "one hundred" you need to type in "100"). What is the probability that the game will end? (Enter a numerical value as your answer with no decimal points. For example, if your answer is "one hundred percent" you need to type in "100"). If they collude and Firm A cheats, what will be the profit for Firm A for all periods? (Enter a numerical value as your answer with no decimal points. For example, if your answer is "one hundred" you need to type in "100"). If they…
Two firms face decisions with two alternatives that can be modeled using Game Theory. For each of the situations described below, CIRCLE the ("Nash") equilibrium (or equilibria) for the "game" given the profit payouts (firm 1, firm 2) for the choices for the firms (or mark "None"). a. Sell One Medium-Size Item or Sell One Large Item and One Small Item Firm 1 Choices Firm 2 Choices Medium-Size Item Large and Small Items Medium-Size Item 31,27 25, 33 Large/Small Items 42,24 30,28 b. Use "9" Price Endings or Use "5" Price Endings Firm 2 Choices Use "9" Price Endings | Use "5" Price Endings Firm 1 Choices Use "9" Endings Use "5" Endings 45,28 42,30 c. Hire a Celebrity Endorser or Donate to Charity 27,25 25,28 Firm 2 Choices Firm 1 Choices Hire Celebrity Endorser Donate to Charity Celebrity Endorser 40, 29 30, 33 Donate to Charity 37,36 48, 32 d. Locate Downtown or Locate in Suburban Strip Mall Firm 2 Choices Firm 1 Choices Locate Downtown Locate in Strip Mall Locate Downtown 32,31 28, 34…
a) Model the situation as a strategic game, assuming both ‘James’ and ‘Robert’ care only about their own comfort. Find the Nash equilibrium (equilibria) if it exists. Also, does a dominant strategy exist for either ‘James’ or ‘Robert’? show ALL steps and working in support to the answerContext:The London Metro Bus is crowded for travel during peak hours. During such travel hours two daily passengers ‘James’ and ‘Robert’ enter the Metro. Luckily, two adjacent seats are free in the bus. Each of them must decide whether to sit or stand. For both, sitting alone is more comfortable than sitting next to the other person, which in turn is more comfortable than standing. consider James as ‘row player’ and Robert as ‘column player).
Please state if there are any strictly-dominant strategies. If there are, please list the N.E. If there is not any strictly-dominant strategy, then find all Nash Equilibrium with one of two methods: Best Response Method or the Definition Method (non-deviation) Richard CENTER 6,2 4,6 WEST EAST NORTH 2,3 1,4 6,5 Jason UP 3,1 DOWN 1,4 5,1 7,7 SOUTH 4,5 2,3 5,2